Price caps on food further extended in Hungary

Minister states goal is single-digit inflation by the end of year

Busy market hall in Budapest. The hall is built in Victorian industrial style, with impressive, arching steel beams supporting a high ceiling and steel-reinforced high windows letting in natural light. People are passing by stalls and large booths, with various products on display.
Beeld: ©Zoltán Szászi
Saturday morning crowd shopping in the Grand Market Hall at Fővám tér in Budapest. With the latest extension, the price caps on various food products will remain in place until the end of June. Inflation remains over 25% as of March, with food prices rising by more than 42% in a year.

At a government press conference on Thursday, Minister in charge of the Prime Minister’s Office Gergely Gulyás has stated that the government’s policy of capping the prices of certain food products will remain in place until June 30.

In March, we reported that Zoltán Török, lead analyst of Raiffeisen Bank, predicted a further extension of the policy, and according to Mr. Török, it might remain in place until the second half of the year.

Mr. Gulyás commented at the press conference that “as long as there is war, there will be inflation,” and that the government’s goal is to bring inflation down to a single-digit figure by the end of year.

In addition, in an unprecedented move, the government has introduced mandatory discount sales measures for larger retail chains. Mr. Gergely Gulyás shared several important pieces of information regarding the planned steps. On Friday, the Ministry of Economic Development and the Ministry of Agriculture released a joint statement revealing further details. Under the government's new measure, products will be categorized into twenty groups. Each week, at least one product from each category must be discounted by at least 10% compared to the lowest price of the past thirty days. The discount cannot include products from the price-cap list.

The news portal SzeretlekMagyarorszá reported in April that “inflation in Hungary is three times the EU average and 8% higher than in Latvia, the second-highest”. reported based on official figures from the Central Statistical Office that inflation in Hungary remained 25.2% in March. Food prices increased in March 42.6% y-o-y, household energy prices by 43.1% y-o-y.

The policy of capping food prices was introduced by the government in January, 2022. The items on the list with capped prices included sugar, wheat flour, sunflower oil, UHT cow’s milk, pork (hock/thigh), chicken (breast, back/carcass), and in November, potatoes and eggs were also added to the list. The latest announcement of extending the deadline of the policy comes after a series of similar extensions. Previously we reported on various professionals’ criticisms on the policy, which was questioned even by György Matolcsy, Governor of the Hungarian National Bank.