The end of price caps means brutal inflation? People living in Hungary should be prepared!

As of 1 October, the price caps on food could be lifted, says agricultural economist György Raskó. Meanwhile, the president of the Association of Independent Petrol Stations expects a decrease in international gas prices.

Price caps have to be lifted sooner or later

Minister of Economic Development Márton Nagy spoke on Inforádió Aréna on Wednesday about the fact that maintaining the price caps proved to be more and more expensive, thus, sooner or later, they would have to be removed. Nagy said at the end of June that “the price caps will last until 1 October, hopefully inflation will ease by then. It is possible to get out of the price caps, it is simple, but the government does not want to get out of the utility price reduction”. Since then, the government has changed the rules of the gasoline price cap and the overhead cuts as well. Inflation increased to 13.7 percent in July, and is expected to rise to 15-16 percent in August, reports g7.hu.

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Gábor Egri: International gas prices will decrease

The president of the Association of Independent Gas Stations believes that the price cap in their sector has created market concentration. Most of the traffic from the SME sector went to multinational companies, which caused difficulties for the small petrol stations. Now they have to win back their customers again. He also added that Hungarians will pay a very high price because of the fixed price of gasoline is at HUF 480 (EUR 1,19). However, according to Gábor Egri, international gas prices will decrease by the end of the year, writes napi.hu.

Inflation may rise to 18 percent in September

According to Mariann Trippon, CIB’s chief analyst, inflation may rise to around 18 percent in September. Gergely Suppan, senior analyst at Magyar Bankholding also calculates with this percentage. In addition, he believes that the lifting of the price caps on 1 October would cause a serious price shock. It is more likely that the government will gradually remove the price cap. Based on his estimate, since fuel prices are currently roughly 50 percent higher than the official price, the complete elimination would be accompanied by a 3 percentage point increase in inflation. As for the food prices, the removal of the price cap would mean an increase of roughly 1.5-2 percentage points. Therefore, the removal of the two price caps could lead to a 22-23 percent inflation.

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Source: napi.hu, g7.hu, infostart.hu