These three food items have doubled in price in Hungary within a year

According to the latest data from the Hungarian Central Statistical Office (KSH), food prices in Hungary continued to rise in January. The database also shows that the prices of three important staples – bread, butter and lard– have doubled in a single year.

Hungary has the highest VAT rate in the EU with 27 percent. According to an expert interviewed by the Hungarian television channel RTL, this will make life even harder for citizens with low incomes.

Challenging times ahead

According to the latest figures, the price of bread in January this year was 111 percent higher than at the same time last year. This means that the average price of white bread has almost reached HUF 1,000 (EUR 2.58) per kilogramme. Butter and lard prices have also risen at a similarly high rate. The price of these food items has also doubled since January last year.

Macro analyst József Hornyák, interviewed by RTL, points out that if one compares the figures for January with those for the previous month, the sharp rise in the price of almost all foodstuffs is still clearly visible. He says that the lowest-income earners are the most affected by the sharp jump in food prices. They are the ones who spend most of their income on food. He calculates that the lowest income group spends roughly twice as much on food as the higher income group.

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High VAT rate

According to Hornyák, the high VAT rate is a major contributor to the plight of the poor. As he says,

the high VAT rate also contributes to the high price level of products, which places the greatest burden on the lowest-income earners.

However, the government does not want to change the VAT rate. They argue that if it was lowered, retailers would not pass on the positive effects of this reduction to consumers anyway. Secondly, according to the Minister of the Prime Minister’s Office Gergely Gulyás, the well-off class already pays significantly more VAT due to their higher consumption.

According to the RTL report, last year people left billions of forints more VAT in the shops than originally expected in the budget as a result of the increased inflation.

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Source: rtl.hu