Orbán cabinet says new profit margin caps will result in tangible price reductions, Ukraine war approaches to end

A government decision to cap supermarkets’ profit margins at 10 percent will result in “visible and tangible” price reductions, Gergely Gulyás, the head of the Prime Minister’s Office, told a weekly press briefing on Thursday.

New profit margin caps will be in force until May

Gulyás said the regulation would come into force on Monday. With the war in Ukraine approaching an end, unjustified price rises must be brought to an end, he added. Intervention in commerce is a “measure of last resort” for the cabinet, he said, but warned that if the profit margin cap was insufficient, there was “more radical” regulation that had precedents in the European Union. The government “has no qualms” about applying measures such as those in Croatia, he added.

He said the profit margin regulations would ban profit margins larger than 10 percent at retailers with revenues larger than 1 billion forints (EUR 2.5m), and prohibit price increases at products with a lower profit margin, he said. The profit margin cap is expected to reduce the prices of eggs, sour cream, flour and milk, as well as other products, Gulyás said. He added that checks for compliance with the new rule would start days after it comes into force.

If supermarkets raise the prices of other products to compensate for the lower margins, the government will intervene, he said. The profit margin cap will be in force until May 31.

The USA on side of peace

Regarding the war in Ukraine, Gulyás welcomed that the US “has come over to the side of peace”, as well as the ceasefire proposal already accepted by the presidents of Ukraine and the European Commission.

He said that Prime Minister Viktor Orbán’s proposal after his “peace mission” in the summer “had identical content”. “Had everyone acted as they are now … hundreds of thousands of lives could have been saved,” he said. “While nobody is disputing Russia’s responsibility in violating international law, it is also true that those who rejected this proposal last July and tried to stigmatise and insult Hungary are now welcoming it. The senseless killing that has happened since then is on their head,” he said.

Ukraine is now starting the negotiations from a worse position than it was in last summer, he said. “We have squandered another six months.” “Like we said then, a peace [agreement] will be very difficult to finalise while the war is still raging. We will need a ceasefire first … and that will lay much better foundations for peace talks,” he said.