Dairy prices skyrocket in Hungary, the worst would come in the spring

Some dairy products were up by 80-90 percent in November. After the panic-like price rises, rising costs could push inflation even higher in the spring, warns the agricultural expert.

Inflation hit another record high in November, wrote forbes.hu. The 22.5 percent rise was mainly driven by food prices, which rose by 43.8 percent. According to RTL.hu, dairy prices increased even more:

• the sales price of Trappista cheese increased by 91 percent,
• curd cheese by 81 percent,
• kefir and 2.8 percent fat content fresh milk in sachets by 78 percent,
• natural yoghurt by 77 percent,
• 1.5 percent fat cartoned UHT milk by 76 percent,
• butter by 74 percent,
• sour cream by 73 percent,
• 2.8 percent fat cartoned fresh milk by 71 percent,
• fruit yoghurt by 64 percent,
• 2.8 percent fat cartoned UHT milk by 61 percent,
• cream cheese by 57 percent,
• and natural butter cream increased by 37 percent.

Previously, the price per kilo of the 82 percent fat content, 100 gram package of producer-brand butter had already crossed the psychological threshold of HUF 10,000 (EUR 23.91), writes Forbes.

Underlying inflation-related psychosis

According to agricultural economist György Raskó, due to low profitability, many processors thought they had to raise prices immediately, because inflation is driving up all prices insanely. This is what we call inflationary psychosis: even those who would otherwise not have thought of it or would not have had the opportunity to do so are raising their prices, he commented on the phenomenon to RTL.hu.

“The increase in producers’ costs and the rise in the price of imports due to the weakening forint make the price increase fully legitimate,” said György Raskó.

Consumers will stop buying dairy products

Customers will not take dairy products off the shelf when they run out of money. The HUF 1,800 billion of election money that the government has given out this year is already running out. Many of those who received it thought they had something to spend. They spent quite a bit. We have to see the terrible trap: if this money runs out, or if households’ money for food decreases, inflation will not decrease, and neither will food inflation.

According to the expert, they will still be sold this year, mainly because of Christmas, but from January onwards, we can expect a significant drop in the quantity bought.

• Read also: Increased prices led to increased theft in Hungary – Daily News Hungary

Price cap: they would get out, but they cannot

Despite the further price shocks in the future, the agronomist does not expect any new price caps to be introduced. According to him, the price cap is a difficult issue: the government would get rid of it, but it cannot. If it were to be introduced, inflation would be so high that it would strain every nerve of the population. Without a price cap, the concerned eight dairy products would face price rises that they do not dare to risk now because of domestic political reasons. There will probably be a slow phasing-out but it is too early to say when.

“Livestock – all species, including pigs, cattle, poultry and waterfowl – are in decline. The consequence of this will be a reduction in the number of animals for slaughter in Hungary. The amount of meat and milk production will also decrease. This is a process that will take a long time to build in, fodder prices and energy prices are now being built in, and the consequences will be felt approximately next spring,”

said the agronomist.

Read alsoHungary has the highest inflation in the EU

Source: forbes.hu, rtl.hu