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SPEAKER: "It is not easy to live in a country that has inflation running at 133 percent a year. Everything is changing all the time, the price of groceries, the price of food. And when things are linked to the dollar, it's hard to predict your salary, it's hard to predict going away on the weekend."





Initials AM/





Script is copyright Reuters Limited. All rights reserved

Background: Israel's inflation has risen to an annual rate of 134 percent. It's the worst in the world. Rising import and raw material costs are partly to blame.

SYNOPSIS: Israelis, long accustomed to three-digit inflation, took the news calmly. To some extent they are cushioned against the worst effects of inflation. hardly had the figures been announced last Wednesday (17 September) than Treasury Officials made it known that wages would go up next month by around 20 percent ... by government order. This is one of the wage rises all employers need to pay every three months to soften the blow of Israel's biting inflation. For the shopper there are still cut price supermarkets with special offers and marked down prices. The shelves are stocked to breaking point, but the consumer feels the sting when he gets to the check-outs.

Taking 1970 as the base year the average consumer price index has risen to around 2,000 percentage points. The money supply in the latter part of the 70's has quadrupled, and imports cost Israel generally twice as much as the country earns from its exports.

When the Begin government came to power in June 1977, it intended to remedy Israel's economic ills by trying to foster a more capitalist economy, but government's efforts have had little effect. Israel relies heavily on imported oil and has to allocate much of its budget to defence. The current political situation in the Middle East does nothing to reduce that. For Israelis, 134 percent inflation, above all, means uncertainty.