Hungary's Inflation Battle: Government Imposes Grocer Profit Limits

Hungary's government is capping grocers' profit margins on basic foods to combat rising inflation, which hit 5.6% in February. Prime Minister Viktor Orbán announced the measure, aiming to curb excessive price hikes, amid external pressures such as the Ukraine war and EU sanctions. This presents challenges before Hungary's 2026 elections.

The Hungarian government has announced a measure to cap grocers' profit margins on basic food items in a bid to combat rising inflation affecting consumers across the country. Prime Minister Viktor Orbán revealed on social media that this policy, limiting markups to no more than 10% of wholesale prices, will be effective from mid-March until the end of May, with a possibility of extension.

Despite withholding specifics about the food items affected, Orbán stressed that monitoring will ensure compliance with the policy. He hinted at recent negotiations with commercial chain representatives failing to meet government expectations amid the backdrop of climbing inflation rates. February's inflation rate stood at 5.6%, with food prices increasing by 7.1% compared to the previous year.

The inflation figures pose a significant challenge for Orbán as Hungary faces economic difficulties and a looming 2026 national election. While the government attributes inflationary pressures to external factors like the Ukraine conflict and EU sanctions, critics argue that past interventions resulted in shifting price burdens elsewhere. Further complicating the issue is the EU's current withholding of funds from Hungary due to judicial concerns.

(With inputs from agencies.)