Hungary: Agricultural companies struggling with inflation
Large companies are now feeling the effects of the inflation curve. Agro companies have had a harder time adjusting their pricing strategies.
In their latest sectoral analysis, the banking company K&H has measured the effects of the high inflation rate on large companies (Annual income of €5.55 million or higher).
According to the report, in agriculture (as well as in industry and in the construction sector), only 56% of large companies were able to adapt their pricing strategies to inflation. In comparison, 58% of service industry companies raised prices in accordance with inflation, and the figure for retail commerce is 74%.
In total, 64% of all large companies in Hungary were able to raise prices due to inflation in Q4, 2021, which is an increase compared to 54% in Q3.
The report also mentions that generally, 57% of all large companies face difficulties due to inflation, however, this figure is 85% in the agriculture industry. The assessment lists transportation and fertilizer costs as major contributing factors to these issues.
In the company’s press statement to the Hungarian news agency MTI, Patrick Van Overloop, Senior Managing Director at K&H commented that while large companies will generally raise prices in line with the inflation trend, they will continue to face issues because raw material prices rose at a higher rate than inflation, and because of wage costs. Mr. Van Overloop added that in the short term, the situation is not likely to get better because even though inflation probably peaked last December, it will continue to remain high throughout 2022.
According to Hungary’s Central Statistical Office (KSH), inflation in Hungary was 5.1% in 2021. The y-o-y inflation in December was 7.4%.
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