Sunday, July 22, 2007

Price of subsidized bread to grow by 12.5 percent

Cabinet approves recommendation to increase common bread prices, compensate pension receivers by adding a few shekels to monthly allowance
Tani Goldstein
Published: 07.22.07, 10:35 / Israel Money

The government approved Sunday recommendations made by a committee entrusted with resolving the "bread crisis" to raise prices of common white and dark bread by 12.5 percent.

Committee members included director-general of the Prime Minister's Office Raanan Dinur, director-general of the Finance Ministry Yoram Ariav and director-general of the Ministry of Industry, Trade and Labor Gabriel Maimon.

The motion included recommendations for compensation allocated to those eligible for pensions, estimated at $12-$24 million a year.

The committee's recommendations are to be implemented gradually, starting with a 12.5 percent increase in bread prices, followed by the adding of a compensatory sum – of a few Shekels - for those eligible for a social security monthly allowance.

The added sum is supposed to also compensate for the nearing rise in the prices of milk and other base products, but being dependent on amending current legislation, it won't come into affect for a few weeks at least.

The last stage of the committee's recommendations – removing bread prices subsidies altogether – is scheduled to take affect starting January 1 2008.

The "bread crisis" began some two and a half weeks ago, when bakery owners demanded to raise prices following a global rise in wheat prices and after gristmill owners raised the prices of flour, which is not subsidized by the government, by 15 percent.

Gristmill owners are currently negotiation another increase, this time by 20 percent.

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