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Eurofound's EU PolicyWatch collates information on the responses of government and social partners to the COVID-19 crisis, the war in Ukraine, rising inflation, as well as gathering examples of company practices aimed at mitigating the social and economic impacts.

Factsheet for measure HU-2022-6/3084 Updated – measures in Hungary

Price cap on basic food items

Élelmiszerárstop

Country Hungary , applies nationwide
Time period Temporary, 01 February 2022 – 31 July 2023
Context War in Ukraine
Type Legislations or other statutory regulations
Category N/A
– Support for other basic items (e.g., food, housing, public transport, medicines)
Author Nóra Krokovay (KOPINT-Tárki) and Eurofound
Measure added 18 February 2023 (updated 07 November 2023)

Background information

Inflation in Hungary reached 8.3% in February and 8.5% in March 2022, and the country’s central bank predicted it could exceed 9% by the end of the year. In response to increasing inflation, the government issued decree 6/2022 concerning food items, providing for caps applicable to a list of basic food products.

Content of measure

On 1 February 2022, the government capped selected food prices at their level of 15 October 2021. The price limit in place concerns basic food items such as sugar, flour, sunflower oil, pork legs, chicken breasts and other chicken parts and milk. Retailers must ensure that the items remain in stock, but they were allowed to sell other, similar items at higher prices. The prices are capped also for the online retail sector. Hungary’s government implemented the price caps in response to surging inflation and a record weakness of the forint against the euro with the intention of helping struggling families. The price caps were extended several times.

Updates

The following updates to this measure have been made after it came into effect.

29 June 2023

The price caps on food items were extended until 31 July 2023 after which date the measure was discontinued.

24 April 2023

The government extended the price cap on basic food items until 30 June 2023

14 December 2022

The price caps on certain food items were extended until 31 December 2022 and again until 30 April 2023. On 9 November 2022 the government extended the price caps to include eggs and potatoes, which must be stocked and sold at their price registered on 30 September 2022.

18 June 2022

The government has extended the price cap on fuel and basic food items until 1 October 2022

Use of measure

In the March 2022 inflation report, the central bank said the food price cap reduced inflation by 0.4 percentage point. Retail turnover rose by 7.3% month-on-month in March 2022 and by 16.2% year-on-year, according to statistical office data. Analysts however said that there has been increased consumption of non-food items which is not a result of the price caps on basic food. Food sales rose by 0.2% while fuel sales, where a price cap was also in place, rose by 50%.

A report by the central bank in December 2022 said that price caps were not successful in curbing inflation, instead they were stoking it, as can be seen by food prices rising higher in Hungary than anywhere else in Europe. The author, András Balatoni, noted that the food price caps affected 2.4% of the whole consumer basket, while food items make up 20% of that basket, so retailers had a chance to raise the prices of non-capped items. A ripple effect could be observed in rising prices of food and food-related services, which also dented competitiveness on export markets.

Another report on G7.hu showed that low-income households experienced nearly 30% inflation in September 2022. Examining inflation inequality, data show that earners in the lowest quintile experience higher inflation than those in the highest quintile and that the gap has been rising over the past few months.

Target groups

Workers Businesses Citizens
Does not apply to workers Does not apply to businesses Applies to all citizens

Actors and funding

Actors Funding
National government
Company / Companies
Companies
National funds

Social partners

Social partners' role in designing the measure and form of involvement:

Trade unions Employers' organisations
Role No involvement No involvement
Form Not applicable Not applicable

Social partners' role in the implementation, monitoring and assessment phase:

  • No involvement
  • Main level of involvement: N/A

Involvement

No involvement was reported by social partners.

Views and reactions

The Trade Union of Retail Workers predicted that there would be a rush on stores as a result of the price caps. A Független Szakszervezetek Demokratikus Ligája (LIGA) and Munkástanácsok Országos Szövetsége (MOSZ) leaders said the price caps were only temporary and that higher-than-expected inflation would call for a second round of wage negotiations mid-year. LIGA also said the price cap was an important measure in putting breaks on inflation, which was beneficial especially for low-income groups.

Sectors and occupations

    • Economic area Sector (NACE level 2)
      G - Wholesale And Retail Trade; Repair Of Motor Vehicles And Motorcycles G46 Wholesale trade, except of motor vehicles and motorcycles

This case is not occupation-specific.

Sources

Citation

Eurofound (2023), Price cap on basic food items, measure HU-2022-6/3084 (measures in Hungary), EU PolicyWatch, Dublin, https://static.eurofound.europa.eu/covid19db/cases/HU-2022-6_3084.html

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Disclaimer: This information has not been subject to the full Eurofound evaluation, editorial and publication process.