Cabinet Votes to Remove State Price-control on Basic Bread

State to lift price-control on light, dark, challah bread; compensation up to NIS 60 mil. allocated to lower class.

The government approved on Sunday to lift all price controls on bread, and voted to allocate NIS 60 million to disadvantaged sectors of the population as compensation. The bread, including white bread, dark bread, and challah, will be removed from the state's price-controlled products in coming days.

The compensation will be distributed starting from December 1, 2007. According to Employment, Trade and Industry Minister Eli Yishai's original proposal, the compensation was to reach up to NIS 80 million.

In addition, the Central Bureau of Statistics will formulate a cost-of-living index for the lower classes' compensation, a process that is due to take several months.

If an addition to the compensation sum is needed, Yishai, along with Finance Minister Roni Bar-On and Prime Minister Ehud Olmert, will reevaluate the issue. The cost-of-living index is dependent upon the costs of basic necessities, such as bread, electricity, and milk.

Last July, the cabinet approved a proposal to increase the price of basic bread by 12.5 percent, following a crisis that saw bakeries shut down their production lines of bread subject to government price controls.

Under a compromise deal, the cabinet also agreed to increase National Insurance Institute allowances according to the increase in next week's cost-of-living index.