End of price inflation for groceries in Hungary?
From 1 June, mandatory promotions take effect in Hungary. Originally meant to help slow down inflation, this was thought to be a clever political move by the government, as grocery chains were already competing with each other through promotions as consumption started declining.
When the measure was announced, the government had figured that they would once again get some free advertising by requiring stores to display that customers owe the discounts to them. However, it seems that the chains have retaliated: they simply included the mandatory promotions among their own promotions. Now customers may even receive a greater discount than the prescribed 10 percent, but not from the government, but from the representatives of Aldi or Tesco, writes hvg.hu.
Current prices
Shopping in late May shows us two things. One is that the prices of non-price-controlled milk and dairy products have somewhat returned to normal levels. In the past months, it was not uncommon for the price of 1.5 percent UHT milk to be twice or even three times that of price-controlled milk. Now, the low-fat version is slowly but steadily showing a decrease in price. However, there is still an almost one-and-a-half times price difference.
As for pork, the price increase seems to have stopped. This is not that visible though, as pork chops, tenderloins, or spare ribs, which have all settled around HUF 2,500 (EUR 6,75), are not becoming significantly cheaper. Of course, the big question will be: what will happen when the price controls go away?
End of price controls?
According to statements from the government, the lifting of price controls (price caps) will primarily depend on how much inflation slows down. Analysts expect this to happen in July, and it is likely to be the case for food prices as well, whether with mandatory actions or without them.
Another thing we can be happy about is that we are slowly returning to the time when we don’t have to learn new prices every month. Apart from seasonal fruits and vegetables, you can buy almost all food items for the same price as a month ago.
Imaginary basket
Let’s visualise the price changes by imagining buying ingredients for a four course Sunday lunch for four people. To make this last month, we would have had to pay HUF 8,139 (EUR 22). Adjusted to current prices, we could make it just for EUR 8,118 (EUR 21,9) this time. In March, the final amount was still HUF 8,316 (EUR 22,4), but a year ago it was only HUF 6,889 (EUR 18,6). This means that the annual inflation is around 18 percent, even though half of the products fall under price-controlled categories.
If we exclude the price-controlled products from the basket, the annual price increase is 36 percent, but on a monthly basis, there is a nearly 3 percent decrease. This may not seem very strong, but it is actually a welcome change.
Source: hvg