Hungary extends food and fuel price caps until July, Orban says

Hungary's government has decided to extend a cap on some basic food and fuel prices designed to curb surging inflation until July 1, Prime Minister Viktor Orban said on Wednesday. Faced with a surge in inflation, Orban's government set a limit on fuel prices in mid-November and followed up with caps on several food staples in February.

Hungary's government has decided to extend a cap on some basic food and fuel prices designed to curb surging inflation until July 1, Prime Minister Viktor Orban said on Wednesday.

Faced with a surge in inflation, Orban's government set a limit on fuel prices in mid-November and followed up with caps on several food staples in February. Both measures, which have contributed to keeping inflation below the double-digit figures seen elsewhere in Central Europe, had been due to expire shortly. Even with the price caps in place, core inflation has risen to two-decade highs.

"In both cases we have decided to extend our price control measures until July 1," Orban, who won a fourth consecutive term in a landslide early this month, said in a Facebook video. The cap on fuel prices, set far below current market prices, has caused losses for energy group MOL, which owns Hungary's only oil refinery.

Orban also needs to decide whether to keep limits on household utility prices at a time of surging European gas prices, which analysts say could lift the cost of that measure to about 1 trillion forints ($2.79 billion) this year. Orban has also imposed a cap on retail mortgage interest rates until the end of June to shield borrowers from rising loan repayments after surging inflation forced the central bank to hike interest rates much further than previously expected.

The bank, which raised interest rates by 100 basis points on Tuesday, as expected, pledged further rate hikes to combat inflation and called on Orban's government to stabilise the budget to curb risks to the economy. ($1 = 358.75 forints)