8-Month Extension of Controls Sought : Israelis Press for Pact on Inflation

Prime Minister Shimon Peres on Thursday sought agreement with trade unions and industrialists on an eight-month extension of wage and price controls that would limit Israel’s inflation to 5% a month.

Peres and four Cabinet colleagues met in Tel Aviv with leaders of the Histadrut trade union federation and representatives of the private sector to work out details after the broad outlines of agreement were reportedly reached during a 15-hour marathon session Wednesday.

The parties were able to agree on price increases for subsidized goods and services, which were published and went into effect Thursday. They averaged 25% for food and 38% for fuel.

Salaried workers were to receive compensation for Thursday’s rises through an extra $10 in their monthly wages and a 5% cut in income tax.

The initial three-month wage-price agreement, known as the “package deal,” will expire Feb. 4. It set ceilings on prices and tied dollar-denominated sales and contracts at an exchange rate of 527 shekels to the dollar.

The controls succeeded in bringing monthly inflation down from record figures of more than 20% to 3.7% in December, with inflation for the whole of 1984 totaling 445%.

Officials said that in the second phase devaluations of the shekel would be linked to the inflation rate, which would be held at 5% per month. Workers would be compensated for price increases with a 5%-per-month cut in income taxes.