Domestic food is more expensive in Hungary than foreign food: why?

Food inflation in Hungary is at a terrible level. But who would have thought that Hungarian trappista cheese would cost more in Hungary than French brie cheese? Read on to find out why domestic prices have become so uncontrollable.

Domestic foods’ prices are higher

A Facebook page called Vakmajom recently published a shocking post about how Hungarian trappista cheese (HUF 4070/kg – EUR 9.62/kg) cost more than French brie (HUF 3598/kg – EUR 8.5/kg) in Lidl.

This is especially interesting as trappista is a cheap, mass-produced cheese, and the much more processed and thus higher quality French cheese in peacetime is at least 50 percent more expensive than the Hungarian one, they write. Similarly, Hungarian salami costs more than its Danish counterpart, and Hungarian butter more than Irish, French or Belgian.

The increase in domestic prices is also high by international standards: according to Eurostat data between August 2021 and August 2022, prices in Hungary rose by 37 percent, the highest increase among EU Member States.

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What could be the reason?

Szeretlekmagyarorszag.hu asked György Raskó, an agricultural economist, why the prices of domestic foodstuffs have become so much higher. According to him, the weak forint has played a role in the soaring food prices. This is because Hungarian producers can sell their products on the world market for euros or dollars. So there is a kind of “export pressure” on them, because they are better off if they get other currency for their products than Hungarian forints.

But he says that the government is to blame for the other part of the price rises. The introduction of price caps was the other effect that pushed up prices. In February, the government decided to cap the prices of six foodstuffs (sugar, flour, cooking oil, pork legs, chicken breast, chicken tail, 2.8% milk) at the price level of last October. The measure, intended to be temporary, has since been extended until 1 October and then for a further 3 months until 31 December.

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Prices started to rise

Then, not only traders started to raise prices, but producers, especially food companies, took the opportunity to charge more for their products. Then, not only traders started to raise prices, but producers, especially food companies, took the opportunity to charge more for their products, writes szeretlekmagyarorszag.hu.

Of course, prices cannot be raised indefinitely. At the end of the chain is the customer, who decides based on their wallet. If the product is too expensive, they either don’t buy it or buy less of it. Or maybe, they replace it with a lower quality product.

When will this end?

According to Raskó, food price increases could stop around February or March. Some correction can be expected for seasonal products, fruit and vegetables, but for other products, prices are not expected to fall back to 2021 levels.

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Source: szeretlekmagyarorszag.hu, Pénzcentrum