Hungarian government clarifies future of price caps
Márton Nagy, Minister of National Economy, made a suggestive statement about the deadline for limiting food price margins.
Profit margin cap in Hungary
In spring 2025, the government took measures in several sectors to curb inflationary pressures and moderate prices, forcing insurance companies, telephone service providers, and banks to reduce their fees.
In March 2025, Hungary introduced a so-called price cap rule, which aims to reduce the prices of basic foodstuffs by capping retail margins. Under Government Decree 42/2025 (III. 11.), from 17 March to 31 May 2025, the margin that retailers can apply to the products concerned may not exceed 10 percent or be higher than the average margin applied to the product in January 2025.
The regulation affects around 30 product groups, approximately 1,000 basic foodstuffs, and only applies to retailers whose net turnover exceeded HUF 1 billion in 2023, so it does not affect smaller village shops, for example. The margin is calculated by deducting the price paid to the supplier or, in the case of own-brand products, the cost of production from the consumer price excluding taxes, and the difference may not exceed the specified limits.
An important element of the regulation is that retailers cannot allow the affected products to run out and are obliged to keep at least as much stock as they sold on average per day in 2024 to avoid shortages. The proportion of own-brand products may not be increased above the sales ratio for January- February 2025, so retailers cannot make up for the shortfall exclusively with own-brand products.
Violations of the price margin cap could result in fines of up to HUF 5 million (EUR 12,360) per product. In contrast, shortages or excessive private label ratios could result in fines ranging from HUF 500,000 to HUF 2 million (EUR 4.940). Consumer protection authorities will monitor compliance with the regulations.
The government introduced the measure to combat high inflation and rising food prices, arguing that unrealistic retail margins further increased prices.
Bill on expanding ATM access to ensure free-of-charge withdrawal, too
A bill to be put to a vote in parliament soon will not only ensure an ATM in every settlement, but guarantee retail clients’ right to cash withdrawals, free of charge, up to HUF 150,000 a month, the National Economy Ministry said in a statement on Monday.
The ministry said the free-of-charge withdrawal rule will also apply to transactions at ATMs that are not operated by the account holder’s bank. The central bank governor will designate banks and settlements for expanding the availability of ATMs across the country, while the national economy minister will set the pace of the initiative.
How long does the profit margin stop last?
Nagy said the markup cap was expected to be extended to some non-food products, too, such as toiletries and children’s care products. The government is weighing the inclusion of 25-30 product categories under the measure, he added. He said the markups cap could be rolled back, “without risk”, when food price inflation remained under 5pc.
He added that if the government decides to extend the measure, the new phase-out date is expected to be at the end of the summer. Depending on May and June inflation data, the markups cap could be extended to ten more food categories.
As the government took steps in several sectors in the spring of 2025 to curb inflationary pressures and prices, insurance companies, telephone service providers, and banks also had to reduce their fees. We wrote about this here. According to the agreement, the arrangements will remain in place until the next parliamentary elections, so it is expected that attempts will be made to extend the food regulations until spring 2026 to ease the pressure on family budgets during the campaign.
At the end of a video yesterday, Minister Nagy named three retail chains that will not be able to avoid price cuts:
- DM
- Müller
- Rossmann
The government’s latest battle with foreign retail companies is particularly interesting because the stores mentioned are all German-owned. Hungary’s economic dependence on Germany is very high, as the minister also acknowledges, but this move could cause tension between the two countries.
Read here for more news about the price cap/profit margin cap in Hungary
Read also:
- Freeze on bank charges in Hungary finalised: OTP Bank is the first to reduce retail charges