Hungary caps food prices

The Hungarian government has frozen the price level of seven basic food products for three months, in a response to the spiralling inflation.

October levels

The Hungarian government has imposed fixed food prices: for three months, retailers must maintain their sales prices of 15 October 2021 for seven basic products. They must also continue to offer the same products and volumes as on that day, so they are not allowed to take items off the shelves to escape the price caps.

The seven products are chicken breast, chicken tail, cow’s milk, granulated sugar, pork leg, sunflower oil and wheat flour. Retailers who happened to give a discount on those products on 15 October, can use the price just before the start of that discount. The move should “prevent the damaging effects of market anomalies”, Prime Minister Viktor Orbán said, referring to the spike in inflation.

Elections

The price cap applies from 1 February to 1 May, and is very likely inspired by the fact that there are elections in Hungary this spring. The opposition already condemns the action and argues for a VAT reduction to 5 % for basic food. Now the burden falls on retailers and that is cowardly, the opposition claims.

Agriculture Minister István Nagy replied that retailers can afford to show “social solidarity” and that food producers and processors are protected from negative consequences anyway, as retailers are not legally allowed to cancel their contracts, Hungary Today said. Anyone who does not comply with the regulation risks fines between 50,000 and 3 million forints (140 and 8,400 euros) for a first offence. Repeat offenders can even face a forced closure of up to six months, HungaryToday reports.