Hungary will force large food retailers to cut the prices of some basic items, the latest effort to rein in the European Union’s fastest inflation with cost controls.
(Bloomberg) — Hungary will force large food retailers to cut the prices of some basic items, the latest effort to rein in the European Union’s fastest inflation with cost controls.
Prime Minister Viktor Orban’s administration has sought to leverage state intervention in a bid to bring inflation that topped an annual 25% in March under control. The government aims to slow price rises to the single-digit range by December.
The new measure — which will set up about 20 basic food categories and force retailers to cut prices of at least one item in each group in weekly sales campaigns — will be in effect by July 1, government spokeswoman Alexandra Szentkiralyi told reporters on Thursday in Budapest. A state-backed price monitoring system will also be in place by then, she said.
Separately, the government is extending price caps on some basic food items by two months until June 30 after inflation slowed only marginally this year, Cabinet Minister Gergely Gulyas said at the same briefing.
The central bank has faulted the system of price caps for fanning inflation by pushing retailers to raise the prices of non-regulated items by a bigger margin, partly to offset the effects of a windfall tax on the sector. Hungary’s food prices increased 43% in March from a year ago.
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