The Hungarian government will cap profit margins in the food retail sector to curb “unjustified and excessive price increases”, Prime Minister Viktor Orbán announced after the February inflation data was released by the Central Statistical Office (KSH). Negotiations with retail chains had been disappointing, as their offers fell far short of the government’s expectations, leading to this decision.
Food prices continue to drive inflation, with consumer prices rising by 0.8% in February compared to January. Food prices increased by 1.2%. The annual inflation rate rose to 5.6% in February, with core inflation climbing to 6.2%.
Starting March 17, the profit margins on 30 essential food items will be capped at 10%. The measure applies to product groups such as chicken and pork, cooking oil, milk and dairy products, eggs, butter and margarine, flour, sugar, and even garlic. The January average prices will serve as the reference point. Small retailers with an annual revenue of less than HUF 1 billion (EUR 2.5 million) are exempt from the regulation.
The new measures will remain in effect until the end of May, at which point they will be reviewed and possibly extended. Non-compliance could result in consumer protection fines of up to HUF 5 million (EUR 12,000) per violation, or in extreme cases, store closures. The fines may be imposed multiple times daily and doubled for repeat offenses.