British Mandate: A Survey of Palestine: Volume II - Page 834

CHAPTER XIX.

Table 1.
Currency in circulation I
millions 981 1061 1341 24 0 I 360 I 41.51 46.5
Bank deposits
millions 20.0 15.7 21.7 31.6 53.6 71.l 81.2
Index of food retail '
prices:
Average Jewish and
Arab markets I 91.31128.9 206.21272.3 299.1 1327.61333.8
Index of wholesale prices:
cereals and meat 88.3 151.8 252.5 348.2 337.4 361.0 333.0
Index of wholesale prices:
other foods 91.6 132.2 210.0 362.6 520.3 4 79.4 458.8

In this way it made an important contribution towards the wartime development of industry and towards the country's prospects of transition to a stabilized peacetime economy. It benefited mainly the urban population since the rural population in general was subject first to compulsory purchase and later to distribution schemes in respect of cereals and received no subsidized or Government controlled supplies. Similarly, meat was directed to the urban markets. It thus most nearly affected the bulk of the wage-earners, and, by reasons of the close inter-relation of the cost of living and wages, the effect of the latter on costs of production. An assessment was made in the year of heaviest incidence (1944/ 45) of the effect of the subsidization of the main commodities, as follows:-


Subsidized Unsubsidized Absolute Difference
difference as% of unsubsidized
mils mils mils

Beef 82 46 14 so
Flour 27 45 18 40
Mutton 458 815 857 44
Bread 312 568 256 45

It was estimated that, if the subsidization (and surcharge) policy as a whole were abandoned, the immediate effect, without allowing for sympathetic rises, would be a net increase in the cost of living index of 23 points. Even discounting the sympathetic rise in the price of other commodities which would have been inevitable, the effect on the wages bill of removal of the subsidies would have been considerable. The following table illustrates the trend of the cost of living in Palestine and a number of other countries of the Middle East :-

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