Hungary's ministry for the national economy has urged retailers to lower food prices within a week or face government intervention, according to media reports.
Citing 'unacceptable' in-store prices, the ministry has demanded voluntary price cuts on essentials like meat, cooking oil, eggs, dairy products, flour, and sugar – items crucial for households and particularly impacted by previous price control measures.
Minister Márton Nagy expects retailers to reduce their profit margins on essential food items to help stabilise prices.
He pointed out that the difference between wholesale and retail prices has grown significantly, and while some recent price drops have occurred, they haven't been meaningful or long-lasting.
The ministry argued that retailer profit margins on these items have grown excessively, while overall food inflation was the highest in Hungary (5.7%) in the EU, followed by Romania (5.3%) and Croatia (5%), according to Eurostat data from January.
If retailers do not cooperate, the government is prepared to reinstate price freezes for certain products, or even cap profits, to control the spiralling costs.
Response From Trade Association
Responding to government pressure to curb inflation, the Hungarian National Trade Association (OKSZ), representing food retailers, told Portfolio.hu that stores are already running numerous sales promotions and will continue these efforts. While specific methods will vary by store and product, the OKSZ stressed that lasting price reductions are impossible without cooperation from suppliers.
The ministry’s decision follows last month’s comments by Hungarian prime minister Viktor Orbán who declared recent food price hikes "unacceptable" and vowed to protect consumers from being "robbed."
In a Facebook video, he cited increases in the cost of staples like flour (+40%), eggs (+30%), dairy products (+39%), and cooking oil (+10-11%). Orbán stated the government aims to negotiate an agreement with retailers to curb these price increases. If negotiations fail, he said that price controls will be imposed and profits capped, if necessary.
In an interview with Hungarian public radio on 7 March, PM Orbán welcomed the ongoing discussions with supermarkets about lowering profit margins. He stressed that faster progress was needed. He acknowledged some stores had begun reducing prices on key staples, but said these efforts were insufficient.
Orbán reiterated his preference to avoid government intervention, such as price controls or profit caps, but warned such measures would be implemented if retailers don't adequately lower prices.
