The Hungarian Government has recently stated that the price cap period would last until 1 July. Fear in the general public arose: customers worry that they will not be able to buy basic staple food items in their local supermarkets due to retailers buying up price-capped products. Read below for more details.
According to Portfolio, retailers have already caused significant staple food shortages in Hungarian supermarkets since they purchase price-capped items – such as sugar, vegetable oil, and chicken breasts – in large bulks. This practice consequently caused a disruption in the shipping process of such food items. One solution proposed by an insider is that supermarkets introduce a double pricing system – one that allows contractors to reclaim the 27% tax on the price-capped products, such is the case at petrol stations – but it is a complicated process that would require a lot of work.
Lidl chains in Hungary will take drastic measures against wholesalers. Soon, Lidl will not allow such customers to purchase price-capped products in their stores.
The reason why restaurants, small retailers, and confectioneries gravitate towards supermarkets is their attractive reduced prices which are considerably lower than the market prices. To prevent product shortages, retailers have only allowed regular household-quantity purchases for customers. However, non-residential customers continued to purchase cheaper food articles in supermarkets, reducing the amount they bought but increasing the frequency of their purchases.
Portfolio predicted a 20 to 30 percent price increase for the currently price-capped products once the regulations will be lifted. The fact that the price cap is still in place until the middle of summer means that certain food products remain cheaper, while the market price of such items will continue to skyrocket, creating a significant pricing difference.
This is the very reason why Lidl took the necessary actions to prevent shortages and be able to continue the distribution of basic necessities for residential customers.
Source: Portfolio.hu, kormany.hu