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23 Tammuz 5762 - July 3, 2002 | Mordecai Plaut, director Published Weekly
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NEWS
Electricity, Transportation Rise
by Yated Ne'eman Staff

On Friday, electricity rates to private homes are set to rise 8 percent. Altogether, electricity prices have risen in the last two months by 13 percent. Of this, 8.6 percent is attributed to the combination of the increase in the CPI, an increase in the price of fuels and the depreciation in the value of the shekel. The remainder of the increase is due to the Electricity Authority's decision to update the cost of electricity according to a new formula that includes expenses incurred by the Israel Electric Corporation that were not included in the previous calculation.

In the past few days the shekel has strengthened. It is now about 4.78 to the dollar after falling to the vicinity of five shekels to the dollar. At this level, it is around where economists say it is fairly valued so if there are no new shocks, it may stabilize there. That would moderate some of the price pressure that has built up in the past few months.

Still, gasoline prices have risen by 3.2 percent over the last two months, even though prices did not rise in world markets in this period. The reason for this price hike is the National Infrastructure Ministry's decision to allow petrol companies to increase the marketing commission they charge consumers. There was also an update of the tax charged on gasoline because of the increase in the consumer price index (CPI).

The price of water charged by the Mekorot Water Company to local authorities went up on Monday by 15 percent as part of the price increments decided upon by the government under the economic austerity plan. The local authorities are expected to pass the price rise on to consumers. In September the price of water charged to the agriculture sector will increase by 49.3 percent from 85 agorot a cubic meter to NIS 1.28 a cubic meter under the reform in prices for agricultural water that is scheduled to raise the price to the farmer of the water to its real cost.

The consumer price indexes in the coming months will reflect the series of recent price increases. However, many observers expect a moderation in the price increases experienced in the first half of 2002. The chief economist at Bank Hapoalim said the CPI in the second half of the year would total 1 percent. An economist at the First International Bank of Israel estimated that the CPI for June and July would be 0.8 percent.

On July 1 public transportation increased by about 5 percent. The bus fare in Jerusalem is now NIS 5.2. Intercity fares, however, generally declined. The rise in city fares was partially attributed to inflation and partially to increased outlays for security.

 

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