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.
