Horrific price increase could be expected in Hungary once the food price cap ends
A sudden price increase will follow the abolition of price caps. In the long term, however, consumers will be better off as the current price freeze is causing serious market disruption, experts believe.
Customers will notice a sudden price increase for most products
A sudden price increase will follow the abolition of price caps, experts told ATV. However, they stressed that it would be necessary to end the price cap as soon as possible because it had been causing significant damage to all market participants. András Máhr, the deputy secretary general of the National Association of Agricultural Cooperatives and Producers, explained to ATV Híradó that if the price cap was lifted, customers would notice an instant price increase for most products, except for milk. The expert also added that the price cap was in fact in nobody’s favour.
The price cap is not beneficial
“It should end now, it doesn’t serve anyone. It is bad news for the economy because it causes supply chain issues and it is not good for the consumers either because it’s misleading. Besides, I’m also afraid that they will have to pay multiple times the price of products once the price cap is removed. Finally, it is detrimental to the producers, taking into consideration the current market disturbances”, András Máhr told ATV Híradó.
The general secretary of the Hungarian National Trade Association, Katalin Neubauer, shared a similar opinion: “It can be observed that the average price increase in the countries of the European Union was around 20 percent, while in Hungary it almost reached 40 percent. We believe that the incessantly prolonged price cap scheme took a real toll on food inflation.”
Chicken legs have risen in price by 55 percent, and chops by 45 percent
Katalin Neubauer also pointed out that the fact that they lose hundreds of forints on a single price-capped product caused a big loss to the traders, and they compensated for this by selling substitutes at a higher price: chicken legs, for example, have risen in price by 55 percent, and chops by 45 percent, writes Index.
Meanwhile, Éva Kulich, the press representative of the National Potato Association and Product Council, told ATV Híradó that domestic potato producers also experienced considerable losses. According to Kulich, the Hungarian market had run out of domestically grown potatoes (approximately, 144,000 tons are consumed a year) so this staple must be supplied from abroad. “We are now working with imported potatoes. Under normal circumstances, if the potato supply arrives and it is more expensive and the purchase price is higher, you can adjust the trade price of it, but in this case, this cannot happen” – she explained.
