The government has decided to maintain the current cap on the price of certain products until June 30, Gergely Gulyás, the head of the Prime Minister’s Office, told a regular press briefing on Thursday.
Referring to the war in Ukraine, Gulyás said that “as long as there is war and sanctions, there will be inflation”, adding that the government was committed to reducing inflation to single digits by the end of the year.
Gulyás welcomed a recent central bank statement that the Monetary Council could decide next week to lower the upper threshold of the interest rate corridor. He hailed the move as “the first sign that could indicate lower inflation“.
On the subject of the war in Ukraine, Gulyás said avoiding the involvement of NATO in the conflict was in the entire world’s interest, arguing that such a scenario would lead to a world war and a nuclear war.
Hundreds of thousands have died in the war so far, and more and more weapons are making their way to the frontlines on both sides, indicating a protracted war for the foreseeable future, Gulyás said.
He said steps that escalated and extended the conflict were “irresponsible” because they posed the risk of a nuclear war.
The Hungarian government is unwaveringly on the side of peace, Gulyás said, noting that it did not send weapons to the war or allow the transit of weapons deliveries through its territory.
On another subject, Gulyás said farmers will not be charged for the water they use to irrigate their land this year. He said the government was committed to reducing the damage farmers suffered due to last year’s droughts, and it would pay for farmers’ water consumption.
Meanwhile, Gulyás said the government had imposed a ban on the import of 25 product categories from Ukraine, including grain, rapeseeds, sunflower seeds, cooking oil, and some meat products until June 30. He added, however, that transit shipments would not be blocked.
He noted that according to the European Commission, Ukrainian grain exports should be facilitated to ease the food shortage in Africa, but added that those imports could “ruin the Hungarian agricultural market instead”. He said corn exports from Ukraine had increased by 7,000 percent and grain by 1,000 percent between 2021 and 2022, adding that the increase had “ruined agricultural distribution channels especially in countries bordering Ukraine”.
On another subject, Gulyás said the government would reduce the price of electricity from HUF 165 (EUR 0.44) to 70 forints/kWh for the smallest businesses above average consumption.
The measure will apply to companies employing 10 or fewer people, with annual takings of no more than 2 million euros, Gulyás said. He expressed hope that the measure would boost the economy and significantly increase the profits of small ventures.
Gulyás said the government would continue its programme ensuring that average retail consumers were provided gas and electricity at the earlier price levels, adding that the scheme cost the central budget a total 1,500 billion forints in 2023. He also added that the government was working to shield businesses from “an unbearable burden”, with special regard to small companies.
Gulyas starts by saying that the government wants to reduce inflation. He finishes by saying he wants to stop lower priced Ukrainian agricultural products from coming on the Hungarian market which would reduce food prices. Fidesz wants to suck and blow at the same time. Price caps on gasoline resulted in a 20% increase in consumption of last year which then resulted in shortages and closed petrol stations (retailers didn’t want to lose money on their sales) and petrol now costs more than in neighbouring countries. Price caps have been historically proven to be counter-productive and the government is to blame for the highest inflation rate in Europe caused in large part by price caps which distort the market economy.