NewsOrban's price cap targets inflation: Hungary limits food margins

Orban's price cap targets inflation: Hungary limits food margins

In Hungary, partial regulation of food prices began on Monday. Viktor Orban's government limited the retail chains' margins on selected food products, arguing that this measure is aimed at combating inflation.

Victor Orban
Victor Orban
Images source: © NurPhoto via Getty Images | Balint Szentgallay
Przemysław Ciszak

The new regulations prohibit large retail chains from imposing margins higher than 10 percent on selected categories of goods. The restrictions apply to entities with annual revenues of at least 5 million CAD. Entrepreneurs who do not comply with the new regulations should expect severe financial penalties.

Additionally, the government announced that if sellers attempt to offset lost profits by raising prices on other goods, the margin freeze could be extended to all food products.

The restriction will be in effect until the end of May, but the authorities have reserved the right to extend it.

Orban does it again

The price regulation of food items was first announced by Prime Minister Orban at the end of February, during a speech before the inauguration of the spring session of parliament. Subsequently, government members argued that retail chains impose margins of 129 percent for cream, 80 percent for yogurt, and 38 percent for eggs.

According to the authorities, these profits were excessive and unjustified. Consequently, between late February and March, there were meetings with the management of retail chains, during which representatives of the ruling Fidesz party tried to persuade retailers to give up part of their profit.

No agreement was reached. The main argument presented by the ruling party for the implemented solution is the fight against inflation and price increases that, according to Fidesz politicians, are unjustified.

In February, inflation in Hungary rose to 5.6 percent year-on-year.

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