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Here are a few tricks on how to shop smartly amid the brutal price hike in Hungary

supermarket store food inflation

Prices have ceased to rise in recent months, but Hungarian wages are still far below the EU average. Here are a few tips and tricks on how to shop smartly in Hungary.

Stagnating prices

From the 1st of June, mandatory shop sales will kick off in most local supermarkets. Every month, ATV will assess by how much the prices of ten staple food items on an average Hungarian family’s shopping list have changed since the last recording.

This time, the cost of bread and milk seems to have stalled, while price-capped eggs are still holding their prices.

The latest report on earnings has been published by the Hungarian Central Statistical Office (KSH). In March, the gross monthly wage stood at HUF 577,900 (EUR 1,549.23), while the net monthly wage was HUF 398,000 (EUR 1,066.95). This shows that real wages fell by 7 percent. Shockingly, Hungarian employees earn only 40 percent of the EU average wage.

On a positive note, macro-analyst József Hornyák says inflation is gradually easing. The last time we observed such a rapid monetary deterioration was back in 2008 during the global economic crisis, he stressed.

Tricks to shop smartly

It’s worth comparing the product prices of each supermarket chain before you set out for your weekly grocery shopping. Lidl Hungary, for instance, is offering its customers more than the 10 percent price cuts, as a response to a country-wide regulation. Therefore, you can get your hands on massive discounts, ranging from 20 to 50 percent, writes pénzcentrum.hu.

Lidl’s wheeze is to pass the price advantage of the purchase price cuts on to customers, and even beyond. Between 1 and 7 June, there will be discounts of up to 25-30 percent on fresh meat and meat products.

“Our company is constantly working to support the Hungarian people in line with the strategic ambitions of the Government of Hungary, and we have already taken a number of steps to do so. Thanks to our latest measure, the We give more campaign, we are dropping our prices by 20-50 percent instead of the mandatory 10 percent reduction, which means an average discount of 31 percent in the first week. As the market-leading supermarket chain in Hungary, we consider it important to offer the best possible prices in every case, as this is how we can be at utmost help to all our customers,” said Judit Tőzsér, Head of Corporate Communications at Lidl Hungary.

 

Bold ideas: Will the ‘Orbán inflation’ be a Hungarikum?

According to a statement issued by the Democratic Coalition on Saturday, the opposition party is asking the Hungarikum Commission to make the ‘Orbán inflation’ a Hungarikum.

In the party’s view, it has now been proven that the government lied to the Hungarian people: there is neither war inflation nor sanction inflation, in fact it is Orbán’s inflation that is driving up prices. Their statement stresses that the inflation rate of over 25 percent in March is completely unique in Europe, three times the European average.

They added: “Whenever Hungary is discussed in any part of the world today, it is not in connection with pálinka, Tokaj aszú or Makó onions, but with the completely unique Orbán inflation. It will be the first and only Hungarikum that no country will want to import,” rtl.hu quotes the party as saying.

The Democratic Coalition recalled that the price of most basic foodstuffs in Hungary has doubled in the last two years, a price increase unmatched anywhere else in the world.

According to DK, there is only one way to curb the Orbán inflation: eliminate the cause, the Orbán regime.

Energy minister: Utility price caps to be maintained till year-end

The government will maintain its retail utility price caps for the whole year, the energy minister said in a video published on Facebook on Monday.

Csaba Lantos said the country would “certainly have sufficient gas” for the next heating season. He added that gas reserves were still high after a mild winter and secure supplies are supported by effective contracts.

On another subject, the minister said Hungary needed nuclear energy, an “energy source with zero carbon dioxide emission”, which could help Hungary meet its climate policy goals.

He said the primary factor behind Hungary’s growth was solar energy, with a total solar plant capacity of over 4,500 MW, which equals two-thirds of the country’s average consumption. He also added that “there will be, again, wind-powered generations, if not too many, because we need that alternative, too”.

The minister added, however, that the domestic extraction of fossil fuels could be “somewhat increased” to contribute to Hungary’s energy independence.

LIST: These items have seen a huge price hike or drop in Hungary in the last 12 months

market újpest hungary price vegetable fruit food

A list of the items which become more expensive or have seen their prices drop since 2022 in Hungary has been revealed. Despite a few surprising ones, the list gives a clear indication as to why inflation is still higher in Hungary than in Western European countries.

The Hungarian Central Statistical Office (KSH) recently reported that in March 2023, due to the high inflation, consumer prices were an average 25.2 percent higher than a year before. Now, hvg.hu obtained the full dataset, which revealed some interesting items that saw a price hike or drop.

KSH followed the price change of over 900 consumer items in the last 12 months, and from those 900 items, only 18 have seen a price drop. The 3 products with the largest price decreases are:

  • home insurance for flats up to 50 square metres in old condominiums – 14.2 percent
  • for apartments in old houses up to 80 square metres – 12.5 percent
  • Xbox One game console – 11.8 percent

The report does not specify which generation of Xbox Console has seen a price drop, which is only odd since KSH are extremely meticulous with some other items on the list. In the last 12 months, these items also became cheaper:

  • insurance for new homes
  • notebook, sound projector, 32 GB memory card
  • 123-139 cm smart LED TV and 76-82 cm LCD-LED TVs
  • men’s perfume
  • hand sanitiser – the pandemic is largely over; the current price drop compensates for the previously seen increase
  • short-sleeved cotton T-shirts for children
  • hearing aids
  • liability insurance for the 2015 Skoda Octavia car
  • the sunflower seed oil (already covered by a price cap) and peaches among the seasonal goods
  • landline telephone subscription.

On the other side of the spectrum, the items that have seen the largest price hike were textbooks. Although in public education, most textbooks are free, those which remained on the market got much more expensive: their price more than doubled since March 2022, with a price hike of 138.9 percent.

Food and services are still getting increasingly more expensive

The price of yellow onions also more than doubled with a price increase of 109.8 percent. The third on the list, with a price increase of 91 percent, is powdered sugar, followed by 18 other food items with a price increase of between 71 and 87 percent.

Services have also become significantly more expensive in Hungary. Flight tickets between Budapest-Frankfurt and Budapest-Paris become more expensive by 52.7 and 48.2 percent respectively. Taxis in Hungary are 48.1 percent more expensive than this time last year. Among non-travel-related services, the biggest increase was for day spa tickets, up 45.7 percent.

Read also: Horror prices await guests in Hungarian hotels this year

Drastic price drops at Hungarian supermarket

lidl_hungary

The German supermarket chain Lidl has launched a massive price drop campaign for several foodstuffs. The domestically popular and well-frequented grocery store franchise has lowered the costs of almost 400 products since January. In some cases, this reached a 30 percent discount.

The 50 percent price rise related to foodstuffs definitely left a visible impact on consumption statistics. The volume of the sale of food products decreased by 9.6 percent compared to last year’s data. This forced grocery shops to make drastic moves and commit themselves to price decreases, writes Pénzcentrum.

Which are the discounted products?

Lidl has confirmed that they lowered the prices of many dairy and bakery products, including butter, cheese, sour cream and white bread. They also mentioned on their list other basic groceries such as rice, honey, pasta and sandwich spreads. Cleaning materials, baby products and fruit juices also saw price cuts.

The average decrease in prices is around 20 percent, even bordering 30 in some cases. According to research by Pénzcentrum, Lidl is the cheapest grocery market in Hungary. In recent months, consumers have become more price-conscious. Shoppers started actively seeking discounts and special offers. To keep up with the changing consumer trends, the supermarket strategically lowered the prices of many basic and best-selling food products.

Milk price controversy

Lidl’s discount flyers have recently informed customers about a huge bargain. The price of the 2,8 UHT milk was temporarily reduced to only 209 forints (EUR 0,56) between 27 April and 10 May. Not only is this an amazing price, but they also announced that one could buy up to 24 bottles, instead of the usual 3.

However, on the day the discount was supposed to come into action, it disappeared from the flyers without explanation or trace. This obviously caused a public outcry, as such low milk prices haven’t been seen since 2006-2007, 17 years ago. Luckily, the communications team at Lidl shortly confirmed afterwards, that they didn’t break their promise, and the price of the 2,8 UHT milk is now 209 forints indeed. It turned out the marketing was such a success, they had to turn it down a notch not to run out of stock prematurely.

By reducing the cost of milk, Lidl has jumped on a global trend. In the past few months, the global market price of dairy products has slowly but steadily started plummeting. If this trend persists, it is questionable whether it makes sense to uphold the fixed price of milk until June.

Read also

Hungarian govt to instruct big grocery chains to offer discounts

Market Hungary food price (2)

In order to lower prices, the government will instruct major grocery chains to offer price discounts, government spokesperson Alexandra Szentkirályi said at a regular press briefing on Thursday.

Szentkirályi said the improvement in the inflation data was already visible thanks to the government’s measures, but the cabinet decided to introduce a new tool based on Greek and French examples, from July 1 at the latest.

The regulation will classify basic foodstuffs into 20 categories such as poultry, cheese, bread, baked goods, vegetables, fruit and cold cuts, she said. And the retail outlets affected will have to offer a product of their choice in all categories at least 10 percent cheaper than the price in effect in the 30 days preceding the special offer, she added.

Products must be selected for the special offers every week in order to ensure that the possibility of purchasing at a discount covers a wide range of products, Szentkiralyi said.

The discounts cannot apply to price-capped products, she added.

Breaking news: Hungarian price caps remain in place until 30 June

Budapest Great Market Hall price caps

The government has decided to maintain the current cap on the price of certain products until June 30, Gergely Gulyás, the head of the Prime Minister’s Office, told a regular press briefing on Thursday.

Referring to the war in Ukraine, Gulyás said that “as long as there is war and sanctions, there will be inflation”, adding that the government was committed to reducing inflation to single digits by the end of the year.

Gulyás welcomed a recent central bank statement that the Monetary Council could decide next week to lower the upper threshold of the interest rate corridor. He hailed the move as “the first sign that could indicate lower inflation“.

On the subject of the war in Ukraine, Gulyás said avoiding the involvement of NATO in the conflict was in the entire world’s interest, arguing that such a scenario would lead to a world war and a nuclear war.

Hundreds of thousands have died in the war so far, and more and more weapons are making their way to the frontlines on both sides, indicating a protracted war for the foreseeable future, Gulyás said.

He said steps that escalated and extended the conflict were “irresponsible” because they posed the risk of a nuclear war.

The Hungarian government is unwaveringly on the side of peace, Gulyás said, noting that it did not send weapons to the war or allow the transit of weapons deliveries through its territory.

On another subject, Gulyás said farmers will not be charged for the water they use to irrigate their land this year. He said the government was committed to reducing the damage farmers suffered due to last year’s droughts, and it would pay for farmers’ water consumption.

Meanwhile, Gulyás said the government had imposed a ban on the import of 25 product categories from Ukraine, including grain, rapeseeds, sunflower seeds, cooking oil, and some meat products until June 30. He added, however, that transit shipments would not be blocked.

He noted that according to the European Commission, Ukrainian grain exports should be facilitated to ease the food shortage in Africa, but added that those imports could “ruin the Hungarian agricultural market instead”. He said corn exports from Ukraine had increased by 7,000 percent and grain by 1,000 percent between 2021 and 2022, adding that the increase had “ruined agricultural distribution channels especially in countries bordering Ukraine”.

On another subject, Gulyás said the government would reduce the price of electricity from HUF 165 (EUR 0.44) to 70 forints/kWh for the smallest businesses above average consumption.

The measure will apply to companies employing 10 or fewer people, with annual takings of no more than 2 million euros, Gulyás said. He expressed hope that the measure would boost the economy and significantly increase the profits of small ventures.

Gulyás said the government would continue its programme ensuring that average retail consumers were provided gas and electricity at the earlier price levels, adding that the scheme cost the central budget a total 1,500 billion forints in 2023. He also added that the government was working to shield businesses from “an unbearable burden”, with special regard to small companies.

MEP Gyöngyösi: With the return of state controlled prices, where is the way out for Hungary?

food store spar inflation price hungary (2)

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MEP Márton Gyöngyösi’s (Non-attached) thoughts via press release:

If you compare 1990, the year when socialism collapsed, with 2023, Hungary seems to have come a full circle. Perhaps the only difference is that socialist leaders made no secret of their ideology: they believed the state had unquestionable power and authority, and it should interfere with every aspect of people’s lives. In their view, the citizens of a socialist state can be no more than subjects who must blindly toe the line. Of course, the system had zero efficiency, but socialist ideologues had a solution: if people are unmotivated and the economy can barely scrape by, apply political power, restrictions and financial subsidies to distort the system to the point where it seems to be working.

Just as the classic line says, the problem with socialism is that you eventually run out of other people’s money. As to what happens after that, Central Europe learned it the hard way in the late 1980s and early 1990s.

Unfortunately, the next model wasn’t much more viable either: since they had little to no experience with democracy and the rule of law, and lacked the Western business standards and the knowledge to operate a market economy, Central European countries ended up with Wild East capitalism, which didn’t bring them closer to the coveted western living standards and didn’t really allow them to converge to the western economy, either.

However, each country responded differently to this problem in the 2000s and 2010s. Some Central European states “grew up”: realizing they can’t catch up with the West without a stable civil democracy and a national economy with a high added value, they made sure to strengthen these political and economic pillars.

Hungary, on the other hand, set out on a different path. After the chaos of the 1990s, many people voted for returning to the socialist ways instead of opting for a democratic, civic future. By now, Fidesz has created a bizarre mix of socialism and the rampant predatory capitalism of the 1990s. In today’s Hungary, the state abuses its power and interferes with the daily lives of its citizens, who are once again considered as mere subjects, just as they were before 1990. If you want to get ahead in society, you are required to toe the political line, just as you were in the socialist system. The media, arts and even education are all subjugated to political considerations again. Lacking major intellectual output, Fidesz-ruled Hungary relies on offering cheap semi-skilled labour.

Workers are kept in the dark: the state tries to prevent them from realizing how low their wages are by centrally controlling prices and handing out financial subsidies. Until the system runs out of money, of course.

Regardless if the Fidesz regime collapses one day or not, if you want to break this vicious cycle, you need to offer something fundamentally different. The Hungarian leftist and liberal forces don’t seem to have realized it to this day. If you compare their political agenda to Fidesz’, the only difference is that they replace the nationalist slogans with woke ideology, but otherwise they want the same kind of nanny state as Orbán.

Today, Jobbik – Conservatives is the only Hungarian party to say that if our problems were caused by the overbearing state, it is unreasonable to urge for even more central interference. We believe it’s high time to treat Hungarian people as adults who are perfectly capable of deciding what they need and acting on it, too.

We stand for a small but efficient state whose main role is to lay down the most important rules and guarantee the most important rights. It must carry out these tasks fully, and strike down mercilessly on those who violate these rules and abuse the system instead of using the opportunities it provides.

Beyond that however, the state has no other role. 

All you need is transparent and simple rules, the highest possible degree of individual freedom and full accountability for your actions. It’s time to really believe in the creativity and abilities of the Hungarian people!

Disclaimer: the sole liability for the opinions stated rests with the author(s). These opinions do not necessarily reflect the official position of the European Parliament.

Minister shared how long price caps can remain in effect in Hungary

Government briefing price caps

The government has reviewed the energy situation in Hungary and said the resources are at hand to maintain utility price caps up to average consumption for households, the head of the Prime Minister’s Office told a regular press briefing on Thursday.

Energy price scheme and war

At a cabinet meeting on Wednesday, the government reviewed the energy situation and concluded that the price caps could be maintained until end-2023 and even beyond, he said. At the same time, high energy prices are a burden on the Hungarian economy, and harm its competitiveness and industrial performance, he said. The government will also help some 14,000 companies, local authorities and churches, which under current legislation would pay for energy at last December’s prices as they failed to renew their contracts with the provider before that date, MTI wrote. The government will enable them to renew those agreements at the current prices, Gulyás said. State-owned energy provider MVM will absorb the 20 billion forint (EUR 53.1m) loss, he added.

Gulyás also said the government welcomed the pro-peace resolution adopted by parliament last week, adding that the most important consideration was for there to be a ceasefire, peace talks and peace in Ukraine as soon as possible. Hungary remains committed to peace, but it became clear last week in parliament that “not everyone on the Hungarian political stage agrees with this,” he said. He said the government interpreted the outcome of last year’s general election as proof that the majority of Hungarian voters also wanted peace. The resolution approved by parliament condemns the military attack against Ukraine and emphasises the importance of humanitarian operations “in which Hungary has had a significant share over the past year”, Gulyás said. He said the state and NGOs worked together “in exemplary fashion” so that Hungary, the first safe country they reached, could accept all refugees from Ukraine.

Water loss

At the Wednesday cabinet meeting, the government also tasked Energy Minister Csaba Lantos with drafting a proposal on revamping Hungary’s water supply system and on uniform prices for water utilities. In view of current energy prices, the government has given the opportunity to local authorities to put water utilities into the hands of the state, he said.

The government said the reconstruction of the water pipelines was long overdue. Overall water loss in Hungary’s water system is 22 percent, but some regions see 60 percent of the water leaking from the system before reaching consumers, he said. When introducing the utility price caps, the government capped the prices of water utilities at the prices at the time, leading to large regional price differences by today, he said.

Government spokeswoman Alexandra Szentkirályi said consumer protection services had conducted a “price cap inspection” between January 23 and 29, and launched 334 procedures as a result. About half, 179 procedures have already been concluded, with shops fined a total of 333.3 million forints. Most offences included cases where price-capped products were found in the shop’s warehouse but were missing from the shelves, she said. The authorities will also launch an online price-monitoring system to look for unreasonable price hikes, and to ensure the sharpest possible competition among shops, she said.

Food price caps

Asked about price caps on basic foodstuffs, Gulyás said they are set to expire in two weeks’ time, and the cabinet will decide on them at its next meeting. The government’s aim is to push inflation into the single digits by the end of the year, he noted, adding that if that goal is reached, inflation could return to “a normal level” next year. Asked why the government was not cutting the retail market price of gas and electricity, Gulyás said the fluctuations in gas and electricity prices were “hectic”, and the prices would have to be changed “every two weeks”. The government’s principle is to keep the price caps on utility bills in place in line with the new regulations, he said. Asked to comment on the left-wing opposition’s refusal to support the government’s pro-peace resolution, Gulyás said the left’s positions on weapons deliveries “or sending troops to the war in Ukraine” had been rejected by an overwhelming majority of voters in the last general election.

Citing recent polls, he said the ruling parties would win again if an election were held today. He said the reason for this was that the left had been “bought off” but was “prepared to engage in childish confrontations”. He criticised what he called “tragicomic” attempts by independent lawmaker Akos Hadhazy and the opposition Momentum party to disrupt Wednesday’s cabinet meeting by removing the barricades in front of the Castle District premises of the Prime Minister’s Office, saying the opposition politicians had been there to “make a scene”. Referring to the opposition’s campaign donations from the United States, Gulyás said that “if these MPs acted this way in the country from which they got their money for the election campaign, then — if they’re lucky — they would have been arrested, or something even worse would have happened to them.”

Read also:

EU funds

“This is the kind of infinitely tolerant country we are,” he added. Meanwhile, Gulyás said Hungary could reach an agreement with the European Commission on its receipt of EU funds “at any time”, arguing that the deal was up to the commission. Though the EC keeps making more and more demands, the government is confident that an agreement will be reached on the issue around the judiciary, he said. Gulyás added, at the same time, that the EC “doesn’t even meet its own deadlines”.

Criticising the left-wing opposition for “working to prevent Hungary from accessing these resources”, he said left-wing MEPs should represent the interests of the country, but instead “they and their European Parliament groups are putting pressure on the European Commission” to withhold the funds. Gulyás said opposition MEP Istvan Ujhelyi was incorrect in his assertion that Hungary had the funds it needed to raise the wages of teachers. Though Ujhelyi cited statements from the European commissioner in charge of employment and social affairs, “what the commissioner said can’t be verified”.

Gulyás said Hungary had yet to receive the cohesion funds it is entitled to from the 2021-2027 EU budget, adding that teachers would receive their pay hike retroactively from 1 January once Hungary is promised that it will receive the funds. Meanwhile, Gulyás criticised a recent statement by teachers’ union PDSZ suggesting that potentially thousands of teachers could quit the profession if a new law changing the status of teachers was introduced. He said the draft legislation had yet to be finalised and the government had yet to consult unions on it. He said teachers could benefit from having a special status.

The minister insisted that secondary school final exams would go ahead this year since, unlike teacher unions, “teachers themselves are committed to their students”. Gulyás said that everyone must comply with the regulations, and while protest had its lawful forms, anyone who stepped beyond these would be acting unlawfully. The government, he added, would respect whatever ruling the courts made on the matter of prospective strikes and demonstrations.

NATO enlargement

Asked about both Sweden and Finland joining the European Commission lawsuit over Hungary’s child protection law while seeking approval of their NATO accession, Gulyás noted that Finland has a caretaker government, but its intervention after Hungary’s parliament approved their NATO membership was “not right”. He said Swedish-Hungarian relations had hit “a low point”, partly due to Sweden’s involvement in the European lawsuit, so confidence-building steps were required “as there is a debate within the governing parties about whether Hungary should support Sweden’s NATO accession”. NATO unity was paramount, Gulyás said, so it was unwise to import disputes between countries into the alliance. “It is up to the Swedish government to take steps to resolve this,” he said. Gulyás said there is no agreement between Hungary and Turkey to coordinate their policies on the ratification of Sweden’s NATO accession.

Gulyás said the danger of nuclear powers of a military alliance getting involved in a war started by a nuclear power that violated international law was greater than it has been at any time since Hungary’s change of political system. The escalation of the conflict through the involvement of a NATO member state must be avoided because this would have to be interpreted as an attack against all NATO member states, the minister said. Asked about Russia’s annexation of the Crimean peninsula, he said this contravened international law. Asked whether Hungary supported Ukraine’s efforts to regain Crimea, Gulyás said he “would not dissuade any country from a war of national defence”.

Meanwhile, addressing domestic matters, Gulyás said the complete revamp of the country’s water network would cost around 1,000 billion forints, and the government already contributed 150 billion forints each year for that purpose. No decision has been taken yet on how long and what resources that renovation would take, he said. On the subject of campaign financing, Gulyás said Datanet, a company linked with former prime minister Gordon Bajnai, paid for the cost of the opposition’s campaign buses, and Datanet received funds for this from the United States.

On European plans to tighten rules for obtaining a driver’s licence, the minister said the government would consider all reasonable proposals but would not support the requirement for motorists over the age of 70 retake their driving tests time and again. He added that Hungarian traffic statistics did not suggest that senior citizens regularly caused accidents; rather, it was the other way round: accidents were caused by drink-driving and breaking the rules by drivers who had only obtained their licence a few years earlier.

Trump and postal services

Meanwhile, Gulyás said that whereas the prime minister had made a friendly statement to Donald Trump in connection with his arraignment, Hungary did not interfere in the domestic affairs of the United States. On the subject of an attempt by some municipalities to levy taxes on farmland, he said the government was engaged in talks on the land tax primarily with the Chamber of Agriculture, and legal options would be examined. He said this kind of tax was “harmful and misdirected”. Regarding police investigations into the Brussels office of the European People’s Party (EPP) in connection with “corruption networks” operating in the European Parliament, he said it appeared that the police probe had also reached the EPP. “All such cases must be investigated,” he said. Regarding the Hungarian postal service Magyar Posta, the minister said the government could not help the state-owned company since this was prohibited under EU rules, so the company must cut its expenses.

Healthcare modifications

On the subject of membership in the Hungarian medical chamber, Gulyás noted that two-thirds of doctors wanted to remain members of the chamber and that the government respected their decision. He added that this did not amount to a political statement on their part. Concerning the plan for the state to take over outpatient clinics, he said certain municipalities were glad to acquiesce, some objected, while others wanted guarantees for their operation. He said richer Budapest municipalities that contributed to the financing of outpatient clinics were concerned that if their funding dropped out a shortage of doctors in particular areas would ensue, and he added that an agreement would be concluded with the municipalities to address their concerns.

Regarding the dismissal of a water management official who wrote a critical opinion about the planned battery plant in Debrecen, in eastern Hungary, Gulyás said the government had nothing to do with personnel decisions at this level, and meanwhile the government expected the strictest requirements to be enforced in the licensing procedure for battery plants. Asked whether the government expected the Catholic Church to pay greater attention to sexual abuse within the church, Gulyás said everyone was expected to obey the law, and child abuse was among the gravest of crimes no matter who committed them. He added that some cases appeared to be “part of a smear campaign against the Catholic Church”. In recent years, he said, the Catholic Church had increased transparency regarding abuses and crimes, however, and the justice system was able to take up the cases with due stringency.

Food price caps set to stay in Hungary despite inflation decrease

food store spar inflation price hungary (2)

The Hungarian government will soon make its decision about the potential abolition of the food price cap. But as consumer prices could have increased by another 26 percent, Prime Minister Viktor Orbán might not take this risk.

The Central Statistical Office (KSH) will publish shortly the latest data in the consumer price index about how inflation affected the Hungarian stores in March. Index.hu reports that after KSH’s publication Prime Minister Viktor Orbán is set to make an announcement regarding the food price cap.

The food price cap is currently in force until 30 April, but Hungarian politicians repeatedly hinted that the measure is set to stay until inflation will decrease.

In February, there was a 25.4 percent rise in prices, including a 43.3 percent rise in food prices. Gergely Baksay, Executive Director of Economic Analysis and Competitiveness of the Hungarian National Bank (MNB) told RTL.hu that they are expecting a 26 percent average food price in 2023. That is 17.3 percent lower than the price increase in February, therefore food inflation should lower in the following months.

According to index.hu, the majority of organisations and market players agree that the measures will remain in place, even though everyone deems that the price cap is unsustainable. The government may likely make an announcement regarding the cost cap on 12 April.

According to index.hu, the majority of respondents believe that the price caps will remain in place until July-August, but some expect the new deadline to be 30 June, a more cautious step.

The last word on the issue

Index.hu reports that opinions regarding the price cap are even divided within the government. However, Prime Minister Viktor Orbán has the last word on this issue and what may be decisive is that he prefers an extension. Orbán reckons that the price cap helps to “protect families”, and until that remains the case, the political risk for potential unrest is too high to phase out the food price cap.

Gergely Gulyás, minister in charge of the Prime Minister’s Office, said that they expect that by June-July-August, the decline in inflation will accelerate rapidly in Hungary. The food price caps are set to remain until inflation hits single digits.

However, as the projections by the National Bank indicate, it is difficult to make positive predictions about the date of the abolition of the food price cap, which is causing more and more economic damage to traders every day.

Orbán shared when price caps would be abolished in Hungary

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The government will remove the current price caps simultaneously with a decrease in the inflation of food prices, the prime minister said on public radio on Friday.

Viktor Orbán said the caps have helped reduce inflation but added that they were an “artificial intervention” in the operation of the market, and had “side effects”. “That is why it is good if the caps disappear from the system and the market returns to its regular operations,” he said. As long as inflation is high, the caps cannot be removed, he added.

Orbán suggested that similarly to the food price caps, the caps applying to bank loans could also be removed. Concerning bank loans, he added that “we introduced all kinds of protective mechanisms but those could even cause problems in normal times”.

The prime minister added, however, that the caps on household utility prices would be maintained.

“When inflation drops under a certain level, measures introduced to rein in high inflation could be removed in a timely manner,” Orbán said.

Orbán: Pro-peace proposal applies to ceasefire

Viktor Orbán also said that Hungary’s pro-peace proposal applies to a ceasefire. The Hungarian parliament is passing a resolution which states that it maintains the position demanding peace and a ceasefire, he said.

“The Hungarian position is not about what type of peace treaty should be signed but about demanding a ceasefire,” he added.

A ceasefire must be achieved, preventing further deaths, he said. Once there is a ceasefire, there is a chance for preparing the framework for peace talks, he added.

World war is a ‘realistic threat’

The war in Ukraine is “worrying and dangerous” for Hungary and “the threat of a world war is no literary exaggeration”, Viktor Orbán said. Orbán said “more and more decisions are passed on using ever newer and stronger weapons” and “the West provides Ukraine with more and more modern equipment”.

While “it could sound extremely exaggerating when some European and American leaders say that if all goes on like this we could arrive at the third world war, it is a realistic danger at the moment”.

“The war is becoming increasingly bloody and brutal, yet the number of European countries and leaders supporting peace is not on the increase at all,” Orbán said.

At the same time, “European people have … started moving towards a ceasefire and peace talks as the number of victims is increasing,” he said.

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When will food prices decrease in Hungary? Here is what experts say

food store spar inflation price hungary (2)

Food prices are expected to decrease at least half a year later in Hungary than in Western Europe. According to Eurostat data, food inflation in the European Union was 19 and a half percent in February. Meanwhile, it was 47 percent in Hungary.

Drop in food prices will be felt later in Hungary than in other countries

“If the price cap is abolished, there will be a very serious jump, which will probably cause serious disappointment to customers who are hoping that the current sale will be permanent and that these foods will return to a lower price level,” György Raskó told ATV. The decrease will be felt much later in Hungary compared to other countries.

However, Gergely Gulyás, minister in charge of the Prime Minister’s Office, said that they expect that by June-July-August, the decline in inflation will accelerate rapidly in Hungary. In the meantime, Balázs Csaba Rigó, president of the Economic Competition Office (GVH), initiated the creation of an online price monitoring database at the government, with which they want to prevent overpricing and increase market competition, writes promotions.hu.

Prices are still increasing

The ATV staff bought a food package with the same items they have been buying since autumn. They have been registering and comparing the prices every month. The staff compared the food prices of 10 products and it turned out that the price of two did not change, but the price of eight increased further.

The staff had to pay HUF 2,490 (EUR 6,44) for a kilo of tomatoes in February, and almost HUF 3,000 (EUR 7,76) now. Apples were HUF 349 (EUR 0,90) a month ago, and HUF 399 (EUR 1,03) in March. The price of the twenty dkg pasta did not change, it is HUF 779 (EUR 2,02). The price of eggs did not rise either. A box still costs HUF 1,199 (EUR 3,08).

The price of sour cream, on the other hand, went up by 24 percent, pork parisian by 37 percent, and brown bread by 7 percent compared to the February price. You can buy the 40 dkg butter for HUF 699 (EUR 1,81), the 2.8 percent long-lasting milk for 645 (EUR 1,67), and the 20 dkg cheese for HUF 422 (EUR 1,09).

They paid a total of HUF 6,500 (EUR 16,82) at the end of the shopping trip, which is HUF 400 (EUR 1,04) more than in February.

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MEP Gyöngyösi: National food assistance programme to replace price caps

food store spar inflation price hungary (2)
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MEP Márton Gyöngyösi’s (Non-attached) thoughts via press release:

Over the last few months, Hungary has seen inflation sky-rocketing to nearly unprecedented heights and even breaking European records, especially in terms of food products. However, while other EU countries were able to keep the process under control, Hungary seems to have little chance to do so, “thanks” to the Orbán regime’s economic policy copied straight from the Socialist handbook.

The constant two-digit inflation puts a huge burden on every Hungarian citizen, hitting low-income families especially hard.

The Orbán regime has been trying to stop the negative processes by imposing price caps on various products, but these measures just drive inflation even higher, cause constant product shortages and put small retailers out of business.

Jobbik – Conservatives drafted a proposal to immediately lift price caps in order to release some of the inflation pressure, while providing targeted assistance to those in need.

Our new programme focuses on the protection of children and families: the National Food Assistance Programme (NÉP) would provide fair, means-tested support for underprivileged Hungarian families. The programme would allow these families to use assistance that would help them to buy healthy, locally grown and produced Hungarian foods, but would not allow non-eligible citizens (without a real need) to draw down the assistance across the board. As proposed by Jobbik – Conservatives, the programme’s costs could be covered from the HUF 1500 billion of additional, inflation-generated VAT revenue paid into the national budget as the additional tax on the prices driven higher by inflation.

Citizens could be eligible for the assistance as follows: Jobbik proposes to provide a regular, monthly assistance to families living at or below the “poverty threshold” as defined by the Central Statistical Office (HUF 65000/month/person) until inflation is reduced to one digit. Citizens registered for the programme would receive non-cash (and non-cashable) vouchers that could only be used for the purposes defined in the NÉP programme, and every commercial outlet would be obliged to exchange them for the goods identified in the programme. As a possible alternative, the Treasury could transfer the NÉP assistance to an electronic card as well.

The NÉP voucher/card could primarily be used to purchase healthy domestic food, vegetables, fruits, grains, bakery goods, fish, meat and dairy products (it would not be used for buying foods with high salt, sugar and fat content such as chips, sugary soft drinks, alcoholic beverages, energy drinks, tobacco products and other luxury goods), in compliance with the effective regulations on communal catering.

Disclaimer: the sole liability for the opinions stated rests with the author(s). These opinions do not necessarily reflect the official position of the European Parliament.

Hungarian Socialists want Orbán drop plans of making Hungary a battery manufacturing hub

Hungarian Socialists

The opposition Socialists call on Prime Minister Viktor Orbán to review his economic policies and instead of developing battery manufacturing, to focus on knowledge-intensive industries, the deputy party leader said on Friday.

Ágnes Kunhalmi told an online press conference on Facebook that the cause of high inflation in Hungary is not the war but Orbán’s bad economic policies. She cited expensive Russian gas, the weak forint, the lack of an agreement with the European Union, a 4.1 percent extra retail tax and neglected compensation to flood damage victims among the reasons.

She said it was a “lie” that price caps posed a huge burden on the economy and she proposed maintaining them until the government scrapped VAT on basic foods, or carried out significant wage and pension hikes. She cited central bank governor György Matolcsy as saying that the mistakes made in the 2010s have caught up with Hungary.

Instead of using battery production as a way to “jump on the bandwagon” in electric car manufacturing, she called for focusing on knowledge-intensive industries, research and development. She urged Orbán to rely on the intellectual capital in Hungary instead of serving foreign interests.

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Huge price jump to follow the abolition of food price freeze in Hungary

food store spar price inflation in hungary

On 1 February last year, the Hungarian government introduced a price freeze on certain food products. Later, following the impact of rapidly rising inflation, the number of price-capped foodstuffs was extended even further. However, all signs now point to the likelihood of abolishing official prices in Hungary within a few months. The possibility of such a measure has already been raised by the Prime Minister himself. This measure could, however, lead to a massive hike in the prices of products that are currently subject to official prices.

According to an expert interviewed by rtl.hu, the price freeze is likely to be abolished in the last weeks of spring or early summer. But, as the expert warns, the prices of the relevant products could even double afterwards.

The government’s view

At the beginning of the week, Prime Minister Viktor Orbán hinted during a parliamentary session that the government was considering abolishing the price freeze. He said the abolition was much needed, as it would trigger a noticeable fall in inflation. According to him,

as soon as inflation is on a convincing and permanent downward path, the price caps can be removed.

He also pointed out that it would be wrong if this kind of state intervention in the economy became a practice.

Record high inflation in Hungary

Currently, however, inflation still seems to be showing no sign of falling in Hungary. As rtl.hu notes, according to the January data of the Hungarian Central Statistical Office (KSH), consumer prices were 25.7 percent higher than a year earlier. Such a high rate has not been seen for 27 years, the news site adds.

The site contacted an economic expert to find out when inflation is expected to start falling. According to the expert József Hornyák, a slight fall in inflation is expected in the months of spring. According to him, if a small decrease of one month is enough for the government’s decision-makers, it is unlikely that the food price freeze will be extended. The official prices are currently in force until 30 April. So, if the price freeze is not extended until then, it would end after 30 April.

However, the expert stresses that Orbán referred to a persistent decline in inflation last time. Therefore, it is more likely that the food price freeze will be abolished if inflation shows a persistent decline for several months. According to the expert,

this is most likely to happen in late spring or early summer. A persistent decline will occur by May or June.

What can consumers expect?

Hornyák warns that shoppers can hardly hope for much good after the removal of the price cap. He expects to see price increases of between 50 and 100 percent for products with a price cap. This means that some products could cost up to twice as much. He explains this by saying that once the food price freeze is abolished, prices will have to catch up with a year and a half of inflation. This will be responsible for the huge jump.

The expert also points out that basically, nothing will become cheaper in shops with the abolition of the price cap. He says that food prices are currently rising by 40-50 percent in Hungary. But with the removal of the price cap, consumers can expect an increase of only 20-30 percent. This means that groceries will not become cheaper, but the rate of price increases will slow down.

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Orbán reveals how long the food price and interest rate freeze will remain in Hungary – UPDATE

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Household energy price caps will remain in 2023, Prime Minister Viktor Orbán said in an address to MPs in parliament on Monday.

Last year, Hungary withdrew some of the excess profits made by some companies with a view to helping Hungarian families and businesses by ploughing the resulting revenue into a protection fund paying for energy price caps, Orbán said, adding that this year it is doing the same.

The government has also made energy policy decisions for the long run, upgrading and developing Hungarian industry in the next decade, though this carries with it significant energy needs, he said.

Orbán said there were some who benefited from the energy prices caused by sanctions, such as the large energy companies that had record-high profits around the world. US companies supply gas to Europe at a much high price than they charge at home, which means that the profits resulting from sanctions are paid mostly by European companies and people in Europe, he added.
Hungary’s industry will be modernised and developed at a fast pace in the next decade, and favourable economic policies will be pursued for foreign investors, Orbán said. The new industrial policy will require more energy, which requires speedy decision-making, he added.

Decisions on developing green energy have been made, the Paks nuclear power plant expansion project is planned to be accelerated, while a decision has also been made to introduce gas turbine power stations, he said.

Meanwhile, the prime minister called the Nord Stream blast “a terrorist act”, adding that Hungary and Serbia had made it clear that if this happened in the case of South Stream, “they won’t get away with it”.

On the subject of child protection, Orbán said that in recent weeks the government had dealt with a “shocking and alarming paedophile case”. He said that the number of child pornography cases was “strongly increasing”, adding that “one cannot comprehend with a clear mind how this could happen in Hungary”.

He said “such cases should not happen in Hungary at all, especially not in schools”. The government has given clear instructions to the authorities to uncover all such cases, and heads of schools and local education officials have been instructed to ensure that “all such cases have immediate consequences.”

Orbán said such “atrocious cases” showed that “gender propaganda must not be overlooked”.

Referring to a government survey last year, Orbán said “3.7 million Hungarians rejected gender propaganda”. “Even if the whole world goes mad, and if Brussels excuses the inexcusable, Hungary must stay sane, an island in Europe in which families could safely send their children to school.”

Orbán asked all groups in parliament to cooperate “in the interest of protecting children”.

Meanwhile, Orbán said:

“We Hungarians must always stand up for our co-patriots beyond the borders, especially in times of war.”

“We mourn Hungarians who died on Ukraine-Russian lines of battle,” he said. “It is painful that our co-patriots in Transcarpathia are suffering atrocities — even during the time of war,” he said, adding that their right to use the Hungarian language had been truncated and the directors of Hungarian schools replaced.

Hungary’s diplomacy must make it clear that Transcarpathian Hungarians “deserve more respect”, he said.

Orbán said that during 2023, Hungary would have to cope with the dangers of a prolonged war, inflation, and migration that continued to be a threat at Hungary’s southern borders. Meanwhile, support must be shown for co-patriots beyond the borders, Orbán said. He called on all lawmakers, regardless of party affiliation, to help Hungary overcome this dangerous period.

Inflation, economy

Inflation will not be removed unless peace has been secured and Brussels has withdrawn sanctions, Orbán said on Monday. The government can moderate inflation, however, and it intends to lower inflation to the single digits by year-end, he added.

War, Ukraine

Orbán also said that on the first anniversary of the outbreak of the war in Ukraine, it was reasonable for Hungary to make it clear that it had not changed its position, and a parliamentary resolution by MPs of the ruling Fidesz and Christian Democrats stating that Hungary remains pro-peace and wants to stay out of the Russia-Ukraine war deserves support.

A clear declaration is needed because Hungary is under pressure daily, he said. “Everybody can see that they want to pressure us into the war”, and they want us “to join pro-war countries”, he said.

Hungary must endure provocations every day, Orbán said. “I ask you not to rise to provocations and we should stick to Hungary’s interests in the political arena,” he added.

In the past two months, as the Russia-Ukraine war continued, new EU sanctions were announced, and it is now clear that energy prices will not return to pre-war levels, he said. Even though European gas reserves have been replenished, the price of gas is three times pre-war levels, he said, adding that this had stoked inflation, with Hungary spending 4,000 billion forints (EUR 10.5bn) more on energy in 2022 than in the previous year.

The results of the government’s public survey on sanctions shows that Hungarians reject the EU’s sanctions policy, he said.

Orbán said it is projected that the economy grew by 4.6 percent in 2022 and employment hit record levels. Exports, he added, were similarly outperforming, and foreign investments in Hungary were the highest seen in more than 20 years. Last year, the budget deficit and the national debt both fell. Orbán also noted pension increases and an expansion of family benefits.

On the subject of the war, Orbán said the government was “observing with serious concern” how Europe was gradually “drifting into war”, noting that several countries were sending tanks and contemplating providing fighter jets to Ukraine. He added that there were those who wanted to send troops to Ukraine, too.

The prime minister said Hungarians decided in the April general election, confirmed by the government’s public survey, that Hungary should “stay out of the war” and not deliver weapons.

“I’d like the war to end as soon as possible; no one can win in this war,” Orbán said.

The prime minister warned of mounting deaths, the threat of hyperinflation, economic collapse, and the possibility of a global war. He repeated his call for a ceasefire and peace talks, noting that Hungary is advocating for peace in all international forums.

Orbán called China’s peace plan “important”, adding that Hungary “supports it”.

He said countries like Hungary which must import most of their energy were especially “tormented by inflation”. With its intensive industrial production, and without its own energy sources, energy slapped by sanctions leads to higher than average inflation, and more time would be needed to combat it. The government, he added, has introduced 20 measures with the aim of breaking inflation and protecting families, and it has also taken action to protect jobs, families and pensioners.

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Hungary faces shortage of potatoes amid uncertainty under food price cap

Hungary, Hungarian, potato, consuming, harvest

Hungarian households won’t be able to purchase home-grown potatoes as reserves have run out after bad harvest. Potato shortage could become a reality if imports won’t meet domestic demand. The price cap makes life even more difficult for traders.

Due to bad harvest, which also affected Western Europe, Hungary has run out of home-grown potatoes by the start of February, agrarszektor.hu reports. There’s uncertainty, whether foreign imports could satisfy the demand.

Shortly after onions, another Hungarian staple food item could be in danger according to the National Potato Product Council (OBTT). Since 9 November 2022, table potatoes are affected by the national price cap.

At that time, the food price freeze was only due to expire on 31 December but was extended at the end of the year until 30 April 2023. For table potatoes, however, there were questions about how long domestic stocks would be sufficient, as the press officer of the OBTT told Agrárszektor.

Éva Kulich said that home-grown product was still available at the beginning of January. However, they were gone by the beginning of February. A complete change in the shops’ offers is now expected. Although the Council has firm contracts in places with importers, two factors are endangering Hungarian potato import.

Firstly, traders are losing out on imports, as the increased purchase prices and transport costs cannot be passed on to the industry, as table potatoes are still under the price cap until the end of April. Secondly, potato harvest in Western Europe was also lower. Overall, the potato harvest was 8-12 percent lower than in a normal year, and this will have an impact on the quantities available for imports.

The expert stressed that the end of May is the earliest period when Hungarian products can start to appear in shops. In addition to the possible lower availability of stocks, there could be another difficulty. Red B-type potatoes, which account for 80-85 percent of Hungarian consumption, are not so popular in Western Europe. Only farmers with strong trading connections to Central Europe plant this specific type of product.

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Expert shared when food prices will peak in Hungary

food store spar inflation price hungary (2)

The removal of price caps may increase prices, and rising imports should also be taken into account. According to Dávid Hollósi, Managing Director of the Agricultural and Food Branch of MKB Bank and TakarékBank, prices are expected to peak around March. However, with a good strategy, the Hungarian food economy can withstand these challenges.

In agriculture and the food industry, the way prices develop on the energy market will also have a strong influence on cost levels, as diesel accounts for 70 percent of energy consumption in Hungarian agricultural production due to the dominant weight of arable crops. At the same time, world market prices are currently falling. According to Dávid Hollósi, Managing Director of the Agricultural and Food Branch of MKB Bank and TakarékBank, the same applies to the fertiliser market.

The increase in the price of pesticides, herbicides and fungicides is compensated by the fact that the price of crops at the current level of around HUF 100,000 (EUR 262.10) per tonne is double the level of previous years. So, for example, the price of wheat has doubled since the beginning of 2020, while the price of pesticides and other products has risen by around 20-40 percent over the same period.

In 2022, after many years, people saw the entire food supply chain increase in price by roughly the same amount. This includes farming sector, food industry and retail sector. Overall, the rise in shop prices almost fully reflected the commodity boom that started in 2021, said the expert to portfolio.hu.

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Real wages may catch up sooner or later with food prices

For a while, people will have to get used to the fact that buying food is a bigger financial burden than it used to be. However, the rise in real wages may catch up sooner or later, and in the longer term, the burden of food shopping will be reduced to previous levels.

“It is possible that the price of some products may fall somewhat due to market developments, but in general, we expect food prices to peak in March.”

In the expert’s opinion, the investments of the past years and the near future will be reflected in improved efficiency, in the availability of cheaper, high-quality food products made from Hungarian ingredients.

Under the current regulation, the price cap is in operation until 30 April. Both the Chamber of Commerce and interprofessional organisations are pushing for its phasing out. It is a realistic possibility in the spring, when inflationary pressures may be easing. Once the price caps are removed, the prices of the products in question are expected to rise, but they are about 50-60 percent higher compared to October 2021.

Differences in trade policy

Imported food does not arrive at such low prices only and exclusively because they are produced at a lower cost in the country of origin in the European Union. They have an efficiency advantage but there are also differences in trade policy. In such cases, producers choose not to reduce output in the event of oversupply, not to store the product, which has a cost, but rather to sell at or below price.

Hungary can avoid similar punches to those in times of pandemic and war if we have a long-term strategy. The country must define the role it wants to play in the European food market. “Hungary has excellent capabilities in the production of primary goods but the country needs to make our food economy more resilient”, concluded the expert.

Horrific price increase could be expected in Hungary once the food price cap ends

food store spar inflation price hungary (2)

A sudden price increase will follow the abolition of price caps. In the long term, however, consumers will be better off as the current price freeze is causing serious market disruption, experts believe. 

Customers will notice a sudden price increase for most products

A sudden price increase will follow the abolition of price caps, experts told ATV. However, they stressed that it would be necessary to end the price cap as soon as possible because it had been causing significant damage to all market participants. András Máhr, the deputy secretary general of the National Association of Agricultural Cooperatives and Producers, explained to ATV Híradó that if the price cap was lifted, customers would notice an instant price increase for most products, except for milk. The expert also added that the price cap was in fact in nobody’s favour.

The price cap is not beneficial

“It should end now, it doesn’t serve anyone. It is bad news for the economy because it causes supply chain issues and it is not good for the consumers either because it’s misleading. Besides, I’m also afraid that they will have to pay multiple times the price of products once the price cap is removed. Finally, it is detrimental to the producers, taking into consideration the current market disturbances”, András Máhr told ATV Híradó.

The general secretary of the Hungarian National Trade Association, Katalin Neubauer, shared a similar opinion: “It can be observed that the average price increase in the countries of the European Union was around 20 percent, while in Hungary it almost reached 40 percent. We believe that the incessantly prolonged price cap scheme took a real toll on food inflation.”

Chicken legs have risen in price by 55 percent, and chops by 45 percent

Katalin Neubauer also pointed out that the fact that they lose hundreds of forints on a single price-capped product caused a big loss to the traders, and they compensated for this by selling substitutes at a higher price: chicken legs, for example, have risen in price by 55 percent, and chops by 45 percent, writes Index.

Meanwhile, Éva Kulich, the press representative of the National Potato Association and Product Council, told ATV Híradó that domestic potato producers also experienced considerable losses. According to Kulich, the Hungarian market had run out of domestically grown potatoes (approximately, 144,000 tons are consumed a year) so this staple must be supplied from abroad. “We are now working with imported potatoes. Under normal circumstances, if the potato supply arrives and it is more expensive and the purchase price is higher, you can adjust the trade price of it, but in this case, this cannot happen” – she explained.

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