Hungary caps food margins to curb soaring inflation
In Hungary, partial regulation of food prices began on Monday. Viktor Orban's government has limited the margins that retail chains can apply to selected food products. The authorities argue that this measure aims to combat inflation.
The new regulations prohibit large retail chains from imposing margins higher than 10 percent on certain categories of goods. The restrictions apply to businesses with annual revenues of at least 3.5 million US dollars. Entrepreneurs who do not comply with the new regulations face severe financial penalties.
Additionally, the government announced that if sellers attempt to compensate for lost profits by increasing prices on other goods, the margin freeze could be extended to all food products.
The restriction will be in effect until the end of May, but the authorities reserve the right to extend it.
Orban does it again
The price regulation of food items was first announced by Prime Minister Orban at the end of February during a speech before the inauguration of the spring session of parliament. Later, government members argued that retail chains apply margins of 129 percent for cream, 80 percent for yogurt, and 38 percent for eggs.
According to the authorities, these profits were excessive and unjustified. Thus, between late February and March, meetings were held with the management of retail chains, during which representatives of the ruling Fidesz party tried to persuade retailers to forgo part of their profit.
No agreement was reached. The main argument presented by the ruling party regarding the implemented solution is to fight against inflation and price increases that, according to Fidesz politicians, are unjustified.
In February, inflation in Hungary rose to 5.6 percent year-on-year.
