Price cap scheme ends after 17 months, significant price drops come in Hungary

The Hungarian government introduced a so-called compulsory price reduction scheme on 1 June. The measure concerned 20 food products e.g. sugar, milk, flour, chicken breast, cereals, fresh vegetables and fruits. The Orbán administration aimed to communicate that they continue to help Hungarian shoppers after the food price cap scheme’s abolishment on 1 August. However, food (and fuel) is still one of the most expensive in the region. Therefore, many Hungarians do their shopping in neighbouring Slovakia or Romania.

We reported on the Hungarian government’s unique compulsory price reduction scheme in THIS article. The two main reasons for its introduction are the abolishment of the food price cap scheme, which went into effect in February 2022 before the general elections, and the soaring food prices with the highest rate in the European Union. The food price rise rate slowed down in Hungary in the last few months but it is still high. In June, it exceeded 29.3 percent. That means basic foodstuffs cost 29.3 percent more than in June 2022. That is a significant surge, the EU’s highest.

Since the government could no longer uphold the food price cap on several food products, they decided to “force” supermarket chains to introduce compulsory 10 percent price reductions. They named 20 food products, including poultry, pork, beef and other kinds of meat, fish, canned fish, processed meat products, milk, sour cream and replacements, yoghurt and similar products. Furthermore, supermarkets were compelled to lower the price of cheese, butter, margarine, vegetable oils and animal fats, bread, pastries, cereals, flour, sugar, fresh vegetables and fruits, vegetable and fruit juices, convenience foods, spices, seasonings, coffee, tea, mineral water and soft drinks from 1 June. Needless to say, food chains in Hungary regularly come up with special deals just like in any other country, so the measure seems only to be an element of the government’s success propaganda.

Price reduction scheme won’t bring major changes

Apart from the reduction scheme, the government also introduced a so-called price monitoring system, which allows customers to compare the prices of 60 food products in the six largest supermarket chains. The daily updated price list is available HERE.

Now the government wants all food stores to introduce at least 15 percent price reductions from 1 August instead of the previously instructed 10 percent, index.hu wrote.

The Hungarian media outlet asked several Hungarian retail chains about the ways the compulsory price reduction scheme affects their business policies. All of them replied that they regularly launch large-scale promotions. Since the government decreed 20 food products to be sold at a lowered price, they had no choice but to adapt to it. But that meant some minor changes in practice. Index wrote that shoppers should be aware of certain tricks of the food stores. For example, sometimes a cheaper product’s promotion ends, and it will instantly cost much more than its original price. Furthermore, there are occasions when the coloured promotion price tag means only a tiny, 2-5 percent reduction.

Interested in shopping-related news? An immensely popular shoe chain leaves Hungary. HERE we wrote about how successful the Hungarian government’s price monitoring system is.