Israel, in a move to trim the national budget, reduced government subsidies for basic foods today, allowing prices to go up an average of 50 percent.
A loaf of white bread jumped 50 percent to 18 cents, a 20-ounce bottle of cooking oil went up 50 percent to 50 cents and milk increased 49 percent to 28 cents a quart.
The move, a source of bitter debate in Prime Minister Menachem Begin's Cabinet, was calculated to save the treasury $140 million a year. But the costs passed on to consumers fueled the staggering inflation rate.
Economists estimated the price hikes would raise the cost-of-living index by 3.5 percent. Inflation for the first half of 1979 was 32 percent, and many economists predict a 100 percent figure before the year is out.
The government said it would increase payments to needy families to compensate for the hikes. Rumors of the increases had sent Israelis scurrying to supermarkets this week to stock up.
Some officials wanted to abolish subsidies, which would have more than doubled food prices. Begin and other ministers were unwilling to face public wrath for such sudden leaps, and the cut apparently signaled a gradual subsidy elimination.
The government pays cost-of-living increases to workers every three months at 70 percent of the inflation rate. Histadrut, the national labor federation, has demanded payments fully linked to the cost of living.