Fuel and food price caps: what does the future hold?

The government will make a decision on the price caps shortly, and it will change many things for shops and petrol stations. Part of the price caps will expire on 1 October but they can be renegotiated at the next government meeting, writes Index.

There is a chance that the cabinet will meet this Saturday but they might only discuss the topic next week. The government can choose between extending or abolishing the price cap. But a third choice, the middle road is the most likely.

“The probability of the two extreme cases is lower, so we can imagine some kind of intermediate solution. For example, a litre of fuel will cost 500 HUF (1.23 EUR) or 550 HUF (1.36 EUR) instead of 480 HUF (1.18 EUR).” – told Gábor Regős to VilágGazdaság.

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The professional leader of the Makronóm Institute said that in the case of foodstuff, this solution would be difficult to carry out, even if they set the maximum price a few percent higher.

As real wages changed positively, the price cap was a great way to increase consumption. It is also an important tool for holding back inflation and ensuring a better standard of living for households, he said.

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Extending the price cap can cause further difficulties for the already struggling producers and traders -for example, it can force hundreds of petrol stations to close down – but it would be good news for the public. Ending the price cap would mean higher inflation and smaller consumption but it would lessen the shortages of certain products.

While many want to abolish the price cap, others prefer to extend the regulation to further products. The most probable outcome will be to find a middle ground that suits everyone’s needs.

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Source: Index