Tel Aviv — Israeli shoppers besiege markets in devaluation
Israel's new government took emergency economic measures Tuesday, slashing the shekel's value and food subsidies, and said it planned a tough austerity drive. The announcement set off scenes of near-panic as shoppers besieged supermarkets to beat Tuesday's midnight price hikes.
The Histadrut trade union federation vowed to fight the measures, and one of Prime Minister Yitzhak Shamir's coalition partners threatened to desert the government unless action was taken to help the poor.
After an all-night meeting, the Cabinet decided to devalue the shekel 18.7 percent against the dollar, raise gasoline prices 23 percent, and halve government subsidies on bread, dairy products, and meat. Inflation stands at 130 percent. Also, the Tel Aviv stock exchange was closed for the third straight day to stop panic selling of bank shares by small investors switching their savings to dollars.