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The cabinet today will discuss a proposal to end the bread crisis by meeting bakery demands and raising prices 12.5 percent immediately. In return members of the lower socioeconomic classes will be compensated by moving up the date for updating National Insurance Institute benefits from January 1, 2008 to August 1, 2007.

The benefits include supplementary income for the working poor, retirees, single-parent families and the handicapped.

In addition, price controls on basic breads will be ended January 1.

Compensation to the weaker classes for the end of price controls will come in the form of a new index to reflect consumption patterns among the bottom 20th percentile. The index will be linked to NII payments. A committee headed by the director-general of the Prime Minister's Office, Raanan Dinur, will be appointed to determine the components of the index, and will include officials from the Industry and Trade, Social Affairs and Finance Ministries.

Social Affairs Minister Isaac Herzog last night considered opposing the proposal, as his ministry believes a more thorough debate should preceed an end to price controls.