The Israeli government’s hopes to hold the lid on inflation got a severe jolt Wednesday, when the Central Bureau of Statistics announced a 1.6 percent hike in the July cost-of-living index.
The news was all the more jarring because July normally is a low-inflation month. There was no increase in July 1986 and it was under 1 percent in each of the last three years.
The Treasury, which expected a maximum rise of 1.1 percent this July, seemed taken aback by the higher figure. It dashed hopes of keeping the 1990 annual inflation rate under 20 percent.
The main culprit apparently is the soaring cost of housing, both purchases and rentals, attributed in large measure to the large influx of immigrants.
Olim receive government allocations to cover their first year’s housing costs. The subsidies have driven up rents for all Israelis by as much as 50 percent, forcing many young, low-income couples out of their homes and into “tent cities,” which have cropped up all over the country this summer.
But the July inflation rate also resulted from the government’s reduction or elimination of many subsidies as a budget-cutting measure.
As a consequence, Israelis are paying more for postal and communications services, electricity and water.
Further price rises resulting from government economic measures are expected to be reflected in the August price index, which will be published Sept. 15. A 1.5 percent increase is estimated then.
Israeli wage-earners are compensated for inflation. But they will get only about 5.6 percent for recent months, and it is not payable until October.
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