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It’s Not 1985, but It’s Worrying

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So it’s true that the price of gasoline was cut significantly on Monday, but that of electricity went up, and price-controlled bread is becoming more expensive, as are price-controlled eggs and dairy products. If we add in price increases for other consumer goods, it turns out that the annual pace of inflation is about 5 percent in Israel, and that’s a matter of concern.

While 5 percent annual inflation is relatively low compared to Europe and the United States (where it’s about 9 percent), sharing in misery is no consolation. Inflation is a serious social ill that mainly hits the weak. Those who suffer from it are non-union employees, whose salaries erode; those living on government benefits; and people with mortgages, whose monthly payments go up due to rising interest rates.

Israel has major experience in dealing with inflation. In the early 1980s, we suffered from triple-digit annual hyperinflation, but managed to extract ourselves from it thanks to a comprehensive economic plan that was launched on July 1,1985. The main provisions of the plan were: deep budget cuts (including to........

© Haaretz

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