Israel’s Devalued Pound Causes 10-20 Percent Price Hike of Goods
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Israel’s Devalued Pound Causes 10-20 Percent Price Hike of Goods

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Israeli consumers awoke today to a new economic situation, in the wake of a sudden devaluation and wage and price freeze, in which they found themselves hit by higher prices for most basic commodities, such as bread, butter, milk, eggs, sugar and fish. New prices were posted this morning for a variety of staple foods. Bread prices were up 10 percent; milk, 13 percent; eggs, 20 percent; sugar, 14 percent; and fish, 10 percent. Gasoline prices went up only two cents a gallon but those prices had been boosted 12 percent in July. As of today, television sets were up in price by about $100 each and small imported cars up in price by $400. Increases of about $100 are expected in the price of most household appliances such as washing machines, refrigerators and air conditioners. The sophisticated Israeli consumers, anticipating significant changes in Israel’s price structure since President Nixon announced last Sunday his sweeping program of changes to defend the dollar, had been buying heavily through the week. Today, some people hunted feverishly for products at the pre-devaluation prices with no success. When Israelis were told that an important announcement would be broadcast around 11 p.m. Israel time last night, they tuned in en masse on their radios to Hear Finance Minister Pinhas Sapir announce-after a two-hour delay-the devaluation and the controls accompanying it. At 2 a.m. they were still listening to commentaries on the devaluation and its likely consequences. (See separate stories from Jerusalem, Washington and Paris.)

Officials of foreign airlines operating in Israel met today and decided to approach the government with a request for a reduction in the travel tax. Israelis now pay 600 pounds plus 10 percent on ship and air travel tickets. The officials expressed concern lest new taxes might sharply reduce overseas travel by Israelis. With banks and other lending agencies closed, except for currency exchanges at Lydda airport and Haifa port, the only “free market” operating was the black market where the dollar was selling at 4.35 pounds, only slightly above the new official rate. Israeli financial circles welcomed the new economic policy. Importers were reported angry because of a ruling requiring them to pay a 20 percent surcharge on goods in stock, declaring they had been promised they would not have to pay more taxes. A spokesman said the importers might seek relief from Israel’s Supreme Court. Cab fares are expected to rise 10 percent. Public transport fares, slated to be increased by 18 percent on recommendation of an investigating committee, will go up an additional two percent.

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