Israel's inflation rate will reach 40 per cent this year, according to a senior official of the Bank of Israel.
GVs Older vehicles on Tel Aviv roads, including trucks and motorbike with sidecar (4 shots)
GV ZOOM IN Buildings left uncompleted (5 shots)
CU Attendant feeding petrol into car (2 shots)
SV Customers at supermarket (3 shots)
SCU Housewife speaking to reporter in English
GV & SV EXTERIOR Bank of Israel building
SCU Governor of the Bank, Mr. Arnon Gafny
CU Newspaper and book on his desk
CU Mr. Gafny speaking in English
TRANSCRIPT: SEQ. 5: HOUSEWIFE: "I also have four children. The youngest is going to the fourth grade and the eldest in the 12th grade, and it's impossible to live on my income. I can make it maybe just for food."
REPORTER: "Was that the way it's always been here in Israel since you came from the United States?"
HOUSEWIFE: "No. I can remember when we first arrived in Israel, I used to spend 20 pounds a week for fruits and vegetables. Now I spend about four hundred pounds a week."
SEQ. 9: GAFNY: "We are looking on the problems of the further. I must stress that now our reserves are high -- our foreign currency reserves. The economic situation looks quite good, so the pressure seems not so heavy to restrain. But I think that the inflation of today might cause problems with the balance of payment for tomorrow."
REPORTER: PAUL DAVIS
Script is copyright Reuters Limited. All rights reserved
Background: Israel's inflation rate will reach 40 per cent this year, according to a senior official of the Bank of Israel. Originally, the Ministry of Finance predicted cost rises of around 32 per cent. This estimate was later amended to between 35 and 36 per cent. And this month (August), the Deputy Governor of the Bank of Israel, Mr. Eliezer Shefer, claimed inflation would reach 40 per cent and questioned whether the Israeli Government could do enough to halt the upward spiral. n 1977, inflation ran at 42.5 per cent and the year before at 30 per cent.
SYNOPSIS: Traffic on Tel Aviv streets testifies to the current state of the Israel economy. With prices for new vehicles now so high, the Israeli driver has developed enthusiasm for small second-hand cars and motorbikes.
Soaring costs for materials and labour have led to many abandoned building sites. Prime Minister Menachem Begin's new economic policy effectively devalued the Israeli pound by 45 per cent. And in spite of a slowdown in economic activity, wages have continued to rise sharply. Thirty years ago, the Israeli pound was worth about four U.S. dollars. Now there are sixteen Israeli pounds to just one dollar.
Part of the reason is Israel's massive defence spending. And the result is difficult budgeting for housewives engaged in the peaceful pursuit of family shopping.
In Jerusalem on Sunday (20 August), the Governor of the Bank of Israel, Mr. Arnon Gafny blamed high wage increases and deficit financing of the public sector.