Cost of living reduction plan released

ISRAEL - In Brief 12 Jan 2023 by Jonathan Katz
A new program to reduce the cost-of-living was presented yesterday by the PM and Minister of Finance. This will include reducing the increase in electricity price to 2.5% (originally 8.2%), the water price by 1% (instead of 3.5%) and reducing the price on petrol by 1.3% (by reducing the excise tax). The municipal tax will be frozen for one year. The funding for these measures will come mostly from a MoF emergency reparation fund for disasters which had accumulated about 2bn ILS. Currently, our inflation forecast has been reduced; we expect January’s CPI to reach 0.1% (possibly zero), February: 0.1% and 2.8% one year ahead. The recent shekel appreciation will also reduce inflationary pressure. This program is not expected to dent fiscal credibility yet; the bigger threat is the plan to institute free child care until age of 3, estimated at 13bn ILS.

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