Inflation Rate in Israel is Lowest Since 1976

Israel ended the first year of its economic austerity program with an inflation rate of 57.7 percent, the lowest for any single year since 1976. The figures, made public here, are for the period June 30, 1985-June 30, 1986. The rate for the previous 12-month period was 380.75 percent.

Speaking on Voice of Israel Radio, Premier Shimon Peres hailed the achievement. He stressed that just as important was the fact that unemployment did not soar as high as anticipated as inflation was reduced.

“As far as I am concerned, the fact that unemployment did not swell into terrible dimensions is no less an achievement than the lowering of the inflation rates,” Peres said. He warned, however, that the economic recovery must be carefully guarded. “This is not something heaven-sent. I think that today, too, we have to work with all our momentum and energy in order to guard the plan and its achievements on one hand and to move to the growth stage on the other,” he said.

There were no updated figures on another goal of the economic program — to reduce Israel’s balance of payments gap. The available figures for the first six months after the plan was inaugurated show a 20 percent reduction compared to the previous six months and a 30 percent reduction compared to the same period a year before. However, the first half of 1984 was marked by heavy imports which is usually the case in an election year, so the comparison may be misleading, economists said.

Only a modest decline was recorded in Israel’s unfavorable trade balance over the past II months. Between July, 1985 and May, 1986, the trade deficit totalled $1.892 billion, a drop of only $125 million compared to the previous year.