State-mandated sales are coming to Hungarian supermarkets, but is there a gimmick?

On 1 June, state-mandated promotions will kick off in many Hungary supermarkets. The Hungarian government is citing the measure as a weapon in the fight against inflation, but will it really ease the burden on shoppers?

What does mandatory promotion mean?

The Hungarian government has previously tried to curb inflation through price caps, which are still in place for a number of staple foodstuffs. On top of this comes the new compulsory measure, which requires the price of a product within twenty specific product categories to be marked down by ten percent for a week. An important stipulation is that the devaluation must be compared to the lowest price applied in the previous month.

The government has defined twenty product categories:

1. Poultry meat
2. Pork, beef and other meat products
3. Fish, canned fish
4. Meat products
5. Milk, cream and substitutes
6. Yoghurt and other fermented goods
7. Other dairy products
8. Cheese
9. Butter, margarine and preparations thereof
10. Other fats and oils (vegetable and animal)
11. Bread
12. Pastry
13. Dried pasta, rice and other cereals
14. Flour, sugar, preserved flour and meal
15. Fresh vegetables
16. Fresh fruit
17. Fruit and vegetable juice
18. Prepared dishes, spices, condiments
19. Coffee, tea
20. Mineral waters and soft drinks.

What changes will be brought to Hungarian supermarkets?

Many people reckon that shops have always given special offers to customers, so nothing will change. According to a hvg.hu article, there will be no big differences compared to what we have seen so far. Government agencies will regularly monitor whether products are really labeled with discounted prices on supermarket shelves.

You may see the price of a previously discounted product drop even further, or you may see unprecedented discounts of up to 50-60 percent in some popular chains.

The regulation does not apply to all shops though. It is defined as applying to retailers whose main activity is “mixed retail trade in foodstuffs” and whose turnover exceeded HUF 1 billion (EUR 2,690,298.77) net in 2021.

Concessions were granted to small shops, which do not have to promote a particular product category if they have sold fewer than five products of that category on the day the regulation was launched.

The promotion runs from Thursday to Wednesday each week, and the regulation is in force until 30 September.

From the categories, the trader picks which product will be discounted. A product can be discounted for a maximum of two weeks. The government also requires that discounted products must be available at the time of opening.

Variable effect

Traders may have a problem if the margin is less than 10 percent for a product category as a whole.

Experts say the regulation will have no impact on inflation. If inflation drops, it is more likely to be attributed to other factors (favourable weather, falling energy prices, cheaper feed).

The new regulation in Hungary makes it also mandatory to inform shoppers by displaying visible banners of the discounts at the entrance of Hungarian supermarkets.