Hungary's government plans to remove price caps on basic foodstuffs from 1 August, and order retailers to make bigger mandatory price cuts for certain food products, the prime minister's chief of staff told a news conference.
Hungary is suffering the highest inflation in the European Union, but the annual rate fell for a fourth straight month in May, when it eased to 21.5%.
Slowing Inflation Rate
Gergely Gulyas, the prime minister's chief of staff, said the rate could slow to 15% by August and to single digits possibly earlier than December. Last year's high base will help bring down the rate during the summer months.
"Disinflation will accelerate during the autumn," Gulyas said.
The price caps on certain basic foodstuffs including milk, sugar, flour, vegetable oil, and eggs were introduced in February 2022. Despite the measure, food inflation was running at an annual 44.8% in December last year.
Trying to curb price growth, Prime Minister Viktor Orban's government has also imposed mandatory price cuts on food items by large retailers.
Gulyas said that from August 1 the size of these mandatory discounts in prices will be increased to 15% from 10%.
Last week, Tesco chief executive Ken Murphy noted that the Hungarian market – in which the UK grocery is a major player – has been challenging in recent years.
"It's definitely been a tough few months in Hungary," he said. "Last year the government injected quite a bit of stimulus into the market and that that kind of sparked quite a high spending spree in terms of customer spend. And that kind of stimulus doesn't exist this year."