Hungary enforces price cap to curb soaring food costs
In Hungary, partial regulation of food prices commenced on Monday. Viktor Orban's government limited the retail chains' margins on certain food products. The authorities maintain that this measure is aimed at combating inflation.
The new regulations prevent large retail chains from imposing margins exceeding 10 per cent on specific categories of goods. These restrictions apply to businesses with annual revenues of at least £2.7 million. Entrepreneurs who fail to comply with the new regulations may face substantial financial penalties.
Furthermore, the government announced that if sellers attempt to recoup lost profits by increasing prices on other goods, the margin freeze could be extended to all food products.
The restriction will remain in effect until the end of May, although 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. Following this, government members claimed that retail chains imposed margins of 129 per cent for cream, 80 per cent for yoghurt, and 38 per cent for eggs.
According to the authorities, these profits were excessive and unjustified. Meetings were held with the management of retail chains between late February and March, during which representatives of the ruling Fidesz party attempted to persuade retailers to relinquish part of their profit.
No agreement was reached. The main argument put forward by the ruling party regarding the implemented solution is the battle against inflation and price increases that, according to Fidesz politicians, are unwarranted.
In February, inflation in Hungary rose to 5.6 per cent year-on-year.
