Hungarian Prime Minister Viktor Orbán’s government has long taken unorthodox methods to bring down food inflation in his country, including price caps, with varying levels of success. His latest policy, which involves freezing the margin of profit on hundreds of products, appears to be clamping down on inflation.
According to the Central Statistical Office (KSH), consumer prices rose by an average of 4.7 percent in March compared to the same period last year, while remaining stagnant on a monthly basis.
The latest data came as a surprise, as analysts had predicted higher price increases. In addition, the rise in food inflation has also stopped, meaning that the margin stop is actually working, writes Világgazdaság.
Remix News produced a video further explaining how Orbán’s price margin freeze is working, which caps the level of profit supermarkets can charge consumers at a 10 percent profit rate. This profit freeze was put in place within a number of categories of food and has affected hundreds of products.
By February, the creeping price increase had reached such a level that the cabinet intervened again in March, led by the Ministry of National Economy.
The consensus of Világgazdaság analysts predicted a 5 percent annual growth in inflation and a 0.2 percent monthly growth.
However, the March data did not cause a negative surprise – in fact, it can be considered an extremely positive surprise.
Food inflation stagnated on a monthly basis; it is not known to what extent, but the effect of the margin freeze that came into effect on March 17 may have already been reflected.
As is known, food prices increased by 7 percent in one year, with the most notable increases being for flour (42.2 percent), cooking oil (32.7 percent), eggs (26.1 percent), and coffee (18.6 percent).
Services increased in price by 7.5 percent, including rent by 11.8 percent, postal services by 11.3 percent, vehicle repair and maintenance by 10.3 percent, home repair and maintenance by 10.0 percent, and personal care services by 9.9 percent compared to March last year.
The core inflation indicator, which is adjusted for one-off effects and best describes inflationary processes, fell to 5.7 percent.
The Central Statistical Office (KSH) announced that household energy prices fell by 2.7 percent, with the price of piped gas falling by 5.5 percent, the price of firewood by 5.1 percent, and bottled gas rising by 10.2 percent.
The price of vehicle fuels decreased by 2.5 percent, while the price of medicines and medical supplies increased by 3.1 percent.
Durable consumer goods increased in price by 0.4 percent and services by 0.3 percent; within the latter, domestic holidays increased by 1.7 percent, personal care services by 1.4 percent, vehicle repair and maintenance by 0.9 percent, and home repair and maintenance by 0.7 percent. Household energy costs fell by 0.2 percent on average, including 0.7 percent for piped gas. The price of vehicle fuels decreased by 4.1 percent.
