End of mandatory discounts and price caps in Hungary: what to expect next?
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Starting from 1 July, the mandatory in-store discounts in Hungary have been lifted, marking the end of the last remnants of price caps that allowed consumers to purchase certain items at or below cost over the past year.
With the removal of these government controls, prices of previously capped items are likely to rise. However, there is potential for price reductions in other products or for stores to offer more competitive discounts, Telex reports.
About the mandatory discounts: descendants of price caps
In early 2022, ahead of the elections, the Hungarian government imposed price caps on six essential food items: granulated sugar, wheat flour, sunflower oil, pork leg, chicken breast, and 2.8% cow’s milk. Later, potatoes and eggs were added to the list. These products had to be sold at prices fixed to a specific past date, often resulting in retailers selling them below acquisition costs and compensating by raising prices on other items.
The government claimed that these price caps helped curb inflation, but critics, including economists and the Hungarian National Bank (MNB), argued that they actually fueled it, making Hungary lead the EU in food inflation. The price caps were phased out by the end of July last year.
Subsequently, mandatory discounts were introduced, requiring larger stores to continually offer discounts on products from 20 categories. These discounts had to be at least 15% below the lowest price from the previous 30 days, resulting in frequent sales but not necessarily significant savings for consumers.
Store reactions
The National Trade Association (Országos Kereskedelmi Szövetség, OKSZ), representing retail chains, welcomes the end of mandatory discounts. They believe that consumers will benefit as retailers can now offer discounts tailored to consumer habits and expectations, enhancing competition and creating a more predictable market environment beneficial for long-term collaborations with domestic suppliers.
Tamás Kozák, OKSZ Secretary-General, noted that while discounts will continue, they will return to normal patterns determined by supply and demand. The items previously included in mandatory discounts are expected to remain part of regular promotions due to ongoing competitive pressures.
WILD – across the board PRICE Increases.
Hungary, this Government has NO factual means certainly in Economic and Financial – Infrastructure Policies to bring about a STABLIZATION process – in subject referred in this article.
The growing PRESSURIZATION on the Hungarian Economy, will see INFLATION – even though it still has been living with and amongst us, which is a contradiction to the PROPAGANDA led “crap” coming out of Orban & Varga – the Fidesz Government, the “strong” and likely probability that INFLATION will return, clearly be “in our faces” to deal with and live with – would not
SURPRISE.
Our Politicians would NEVER fuel inflation! The facts lie! The data – Soros! The MNB are idiots! What do the IMF know, anyway?
https://www.imf.org/en/Publications/selected-issues-papers/Issues/2023/02/27/Drivers-of-Inflation-Hungary-530224
The approach may be economically illiterate, but it’s the way you spin it as a Politician, right?