The cabinet will discuss Sunday a proposal to increase bread prices by 12.5 percent in the wake of an ongoing crisis that saw bakeries shut down their price-controlled production lines.

In a compromise deal, the government will debate a national insurance allowance raise of NIS 3-4, whcih will cost an estimated NIS 2 million annually, in a move aimed at helping consumers hurt by the bread price raise -mostly pensioners and others receiving funds from the state.

Earlier in the year, bakeries had demanded the government lift price controls on bread, citing a worldwide increase in the price of grain and prompting a backlash by angered consumer groups.

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As no solultion could be reached, many bakeries stopped making price-controlled bread, saying they were losing money on their production.

In an emergency meeting, Minister of Industry, Trade and Labor Eli Yishai (Shas) met with bakery bosses and asked them not to stop production.

Bakery heads agreed not to stop production, but said they would do so only for a limited two-week period until a long-term solution is found.