Price caps are over in Hungary: here is what to expect regarding prices
The Hungarian government has announced changes to the food price caps system, set to take effect from 1 August. The system of official prices will be abolished. However, certain product categories will remain subject to mandatory promotions until at least 31 December.
This adjustment aims to strike a balance between allowing market forces to determine prices while ensuring some level of price stability for essential goods. However, the removal of price caps may result in variable pricing for specific products. It remains uncertain whether food sold at depressed prices will become more expensive, writes HVG.
Effect in practice
Chicken breast: The current purchase price for chicken breast is HUF 1,938 (EUR 5,24) per kilo, while most shops sell it at HUF 1,499 (EUR 4,05) per kilo. With the removal of price caps, the discounted price would be HUF 1,647 (EUR 4,45). This is a potential overnight price increase of 10 percent. However, the purchasing trend suggests that by August, the price increase is likely to be slightly lower.
Fine flour: BL55 flour, available at an average price of HUF 198 (EUR 0,53), could see a decrease in consumer prices to HUF 168 (EUR 0,45) for private label products and HUF 155 (EUR 0,42) for branded products if the price freeze is abolished in August. This means that instead of getting more expensive, this type of flour would decrease in price.
Cooking oil: The price disparity between own-brand and manufacturer-branded cooking oil is significant. With the removal of price caps, prices are expected to decrease to HUF 459 (EUR 1,24) for own-brand products and HUF 493 (EUR 1,33) for branded products.
Pork hocks: The current average purchase price for pork hocks is HUF 1,655 (EUR 4,47). With the new compulsory action, the price could potentially decrease to HUF 1,407 (EUR 3,80).
UHT milk 2.8%: Milk prices have shown a significant divergence between price-fixed and non-price-fixed products. With the removal of price caps, UHT milk prices will probably decrease to HUF 156 (EUR 0,42) forints for private label products and HUF 281 (EUR 0,76) for producer brands.
Eggs: The price of eggs, based on packing center prices, is currently HUF 54 (EUR 0,15) per piece for M-L eggs. With the removal of price caps, prices may decrease to HUF 46 (EUR 0,12) per piece.
Granulated sugar: The international market price for granulated sugar has risen over the past year, and this trend may continue. As it stands, retail prices could increase to HUF 314-323 (EUR 0,85-87) per kilo from the current average retail price of HUF 261 (EUR 0,71).
Optimist outlooks
It is important to note that promotions within specific product categories will now be at the discretion of individual shops, rather than being universally applied. This means that only certain products within a category may be subject to price caps.
While the hope is that prices do not rise further, there are reasons for optimism. Factors such as improved weather conditions, reduced energy shocks, and lower consumption levels may contribute to lower food prices in general. However, the potential impact on operators within the food supply chain and the final retail prices remain to be seen.
Source: HVG