Hungary Lifts Compulsory Price Cuts on Basic Foodstuffs as Inflation Eases

Hungary will end compulsory price cuts on basic foodstuffs for large retailers starting July, due to a fall in inflation. Introduced in June 2023 to combat soaring food prices, the scheme required discounts on 20 food items. The ministry cited rising real wages and increased consumption as factors.

Hungary will end compulsory price cuts on certain basic foodstuffs for large retailers from July amid a fall in inflation, the economy ministry said on Tuesday.

Prime Minister Viktor Orban's government introduced compulsory price cuts in June 2023 as it battled the European Union's worst surge in food prices, posing a challenge to the veteran leader who has been in power since 2010. "Due to the pushback on inflation, real wages have been rising since September 2023, that is, the income of families is worth more, which contributes to the lowering of caution and thus an increase in consumption," the ministry said.

Inflation peaked at 25.7% year-on-year in January 2023. It has returned into the central bank's target range of 2% to 4% since then, with May CPI at an annual 4%. Under the compulsory price cut scheme, retailers with annual turnover of more than 1 billion forints ($2.72 million) had to offer weekly discounts on 20 food items including poultry, milk, cheese and bread of at least 15%, compared with the lowest price offered in the previous 30 days. ($1 = 367.85 forints)