The prices of some products In Hungarian supermarkets have dropped by a third or even a half. According to Magyar Nemzet, which analyzed prices for a list of almost 1,000 products from the Ministry of National Economy, slightly more than three-quarters of them have seen their prices reduced to a greater or lesser extent.
Orbán’s margin freeze came into effect in stores on Monday, according to which the retailer’s margin on certain products cannot exceed 10 percent.
The margin freeze affects 30 product categories; however, margins on dairy products had been especially high. According to data from the Central Statistical Office and the Institute of Agricultural Economics, in January this year in the case of sour cream, the difference between the purchase and consumer price was 128.9 percent, for fruit yogurt, it was 87 percent, and for butter, it was 86 percent.
Compared to fruit yogurt, a lower, but still 74.9 percent margin was applied to natural yogurt, and stores sold cottage cheese for 69 percent more than the purchase price.
The size of the margin applied in retail varies from product to product, and this is influenced by their own internal pricing policy, agreements with suppliers, and the current market situation.
Dániel Molnár, the chief analyst of the Hungarian Economic Development Agency, said that in recent times, the difference between the purchase price and the consumer price has typically been below 10 percent for private-label flours, while for manufacturer brands it has been above 70 percent. But the same difference also appears in the case of milk between private-label and manufacturer brands, with a ratio of 16 and 60 percent, respectively.
In the case of manufacturer-branded Trappista cheese, on the other hand, the margin is 30 percent, while for chicken breast fillet, for example, the margin is only a low 3.5 percent. It can therefore be seen that even in the case of basic foodstuffs, the variation is very large, and the picture may be even more varied between different chains.
There is no question that the measure will impact smaller stores, as the margin cap only affects larger stores with an annual turnover exceeding HUF 1 billion. Smaller stores are also popular due to their convenience and accessibility. For example, they can be found in smaller settlements or suburban areas, where it is easier to do daily shopping than in larger chains that are typically found in busier hubs.
