Panic shopping, price increases expected in Hungary after price cap abolition

The Hungarian government will end the food price cap from 1 August. This could lead to a spike in the price of many foods, which could result in panic buying.

End of the price cap

The food price cap in Hungary will end from August. According to an announcement by Gergely Gulyás, Minister of the Prime Minister’s Office, the Hungarian government has extended the price cap until 1 August. As a result of the price cap, certain basic foodstuffs such as chicken, flour, sugar and milk were available at the same price in all retail outlets in Hungary.

Once the price cap ends, the products will not be immediately available at market prices, but prices will rise considerably. Levente Tóth, an expert at Bank360, believes that Hungary will see a glass half empty, half full situation.

“After 1 August, products that have been subject to a price cap so far will also be included in the range of goods subject to mandatory promotions,” the expert is quoted by Blikk, a Hungarian tabloid.

This means that retailers will have to offer goods at 15 percent below the purchase price. This gives shops a lot of leeway, as they can buy the same product at several prices, depending on the supplier.

Soaring prices, panic buying and shortages

Prices are bound to jump, although not as much as if there were no action. However, the expert believes that the inflationary impact of the price cap will not be reversed in August. The result could be a new wave of panic shopping in Hungary.

The last time there was a surge in buying was at the start of the coronavirus pandemic. At that time, Hungary was the country in the European Union that saw the biggest retail boom, but a similar boom was seen in 1990 when fuel prices rose by 65 percent. In 2022, motorists stormed petrol stations, leading to supply problems.

“The abolition of the price cap may lead to an increase in demand for the products concerned, but our company is constantly working to meet the needs of our customers,” Lidl said. Spar does not expect any supply problems, but is maintaining a buying restriction on milk, for example.

Blikk has calculated how much the price of products with a price cap will cost after the abolition of the price cap. A litre of sunflower oil will jump from HUF 700 to 1,000 (EUR 1,9 to 2,7), a kilo of chicken breast and pork legs could cost HUF 200 (EUR 0,54) more, while milk and sugar could rise by HUF 60 (EUR 0,16). However, the price per kilo of chicken rump and fine flour could even fall due to changes in supplier prices.