Eshkol Reviews Effects of Devaluation; Reports Slight Rise in Prices

Finance Minister Levi Eskil declared today, in a summary of Israel’s five-week experience with devaluation, that the average rise in prices was slightly more than one-half of one percent.

Adding that if there had not been a two percent rise in prices in the month preceding devaluation, there would be no excuse whatever for any increase in cost-of-living allowances to workers, the Finance Minister reiterated his opposition to any such increases before July. This is the date set in agreements between manufacturers and the Histoid-rut, Israel’s Labor Federation, for consideration of changes in the allowances.

He reported that while there had been a significant rise in prices in the first two weeks following devaluation of the Israel pound to three to the United States dollar, a decline in other prices brought the net increase to .06 percent. Among prices that rose, he listed tea, coffee, rice, toys and electrical appliances. Clothing and meat prices went down, he said.

He added that the recent action of the Treasury enabling Israelis traveling abroad to take $250 with them, as well as liberalization of some import duties, had brought down the price of “black” dollars and that a further drop was expected. He said there was currently a ten percent difference between the official and the black market rate of the dollar.

The Finance Minister insisted that the principal remaining fiscal problem was that involving the increase in cost-of-living allowances demanded by Hit-and-run officials. He warned that if such boosts were not averted, unpleasant developments might follow because Israeli industrialists had declared that if they were compelled to pay higher wages, they would not be able to maintain present prices. This, he added, could lead to a new round of wage and price jumps.