Fear of Inflation in Palestine Declines; Prices Are on Their Way Down

Indications that the inflation in Palestine is becoming less serious are reported in an article in the current Foreign Commerce weekly, official magazine of the United States Department of Commerce, which converses the trends and prospects of Egypt, Palestine, and Iraq. Prices in Palestine reached their high-point and are on their way down, the article says.

The inflationary peak in Palestine has been passed, it appears. Indexes computed to show the prices from month to month reveal that the retail prices of food, in the towns of Jerusalem, Tel Aviv, Jaffa, and Haifa, fell from 166.59 in June, 1943 to 132.05 the following November.

Currency in circulation increased 35.4 percent in Palestine during the latest twelve months surveyed, compared with 48.2 percent for Iraq and 25.4 percent for Egypt. But in none of these countries, it is pointed out, is there a lack of confidence in the currency, which is based upon the pound sterling. The inflation, it is explained, has arisen from quite different reasons from that in Germany during the last war. It consists of a shortage of consumers’ goods in relation to purchasing power, but it is a result of inadequate shipping space and increased Allied expenditure and not of the issuing of unbacked currency. Neither is it a case of unbalanced budgets.

Effective rationing and price control, begun earlier in Palestine than in Egypt or Iraq, has been strictly administered, according to the article. The Government has spent considerable sums on both food subsidies and cost-of-living allowances. During the fiscal year 1943-44 the former item amounted to 3,500,000 pounds and the latter to 2,500,000 pounds.

An abnormally liquid position of credit in Palestine is reported with danger that the large funds available for investment will threaten the financial stability of the country.

An adequate food supply is an important factor in the control of inflation, and it has been estimated that the yield of cereal crops planted in February, 1944 in Palestine will be somewhat larger than fifty percent of the average yield. A bumper crop of potatoes – about 10, 000 acres were planted – will augment the cereal supply.

As additional factors which may act to curb inflation in Palestine, food rationing continues, and the responses of the public to “utility” clothing are called “encouraging.” Also military expenditure may be expected to decline as military operations move farther from Palestine.