After food inflation hit 7.1 percent in February, Viktor Orbán announced in a video posted to his Facebook page that they would limit store margins. 

The government gave stores until the beginning of this week to submit proposals to reduce prices, but the prime minister said their offers were insufficient, so the new restrictive government measures will come into effect in mid-March, writes Portfolio. 

“In order to curb unjustified and excessive price increases, we have been negotiating with representatives of retail chains in recent days. Unfortunately, the offers from retailers fell far short of our expectations, so we had to decide to introduce measures for trade,” said Orbán, adding that “from mid-March, retailers’ margins on 30 essential foods may not exceed 10 percent.

The prime minister said that store margins had been 40 percent for eggs and more than 80 percent for butter and sour cream. “Let’s face it, this is unacceptable,” he said.

The measures will remain in force until the end of May, when they will be reviewed. “We will put an end to excessive and unjustified price increases,” the Hungarian PM said. 

February inflation data released this morning showed further price increases, despite an expected drop. Food inflation is already 7.1 percent on an annual basis and rose on average by 1.2 percent in just the last month.

In just the past month alone, prices of the most basic food items have increased as much as 5.4 percent for cooking oil and 5.2 percent for coffee, while chicken jumped 1.9 percent. Over the past year price spikes have ranged from 11 percent for dairy products to 44.3 percent for flour.

The effects of the government’s cap may first appear in April inflation data.