Price caps for eggs and potatoes. Hungary is responding to record inflation
The Hungarian government is introducing price limits for eggs and potatoes – reports Reuters. The agency refers to the words of the chief of staff of Prime Minister Viktor Orban. Gergely Gulyas admitted that this was a response to worrying inflation data. Food prices rose sharply in October.
Reuters recalls that In February, the government introduced a price cap on six foods, including milk and flourto protect households from rising costs, while fuel prices and mortgage rates have also been reduced.
Recorded in October 2022. CPI inflation in Hungary has been at its highest in 26 years. However, according to economists, this local peak may not be sustained for a long time, because the inflationary pressure in the Magyars’ economy is high, which is indicated by the high level of the so-called core inflation. The main CPI index may reach 25% by the end of the year. (even the Hungarian authorities point to this level). And this despite the government-imposed price cap on fuel, household electricity, mortgages and basic food products.
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Core inflation, i.e. a reading that does not take into account the prices of energy, fuel and food directly, rose 22.3% in October. year on year from 20.7 percent in September (i.e. it broke the forecasts of 21.4 percent). This shows a spillover of inflation across the economy and widespread second-round effects (passing the rising costs of producers onto end users), resulting from strong internal demand.
It is worth noting that core inflation – which is rare – in Hungary is higher than the main CPI. The main reason are anti-inflationary shields lowering the CPI reading.
Hungarian inflation strongly beats the country’s central bank’s inflation target of 3%. plus or minus 1 percentage point From Hungarians maintain the end of September the benchmark three-month deposit rate of 13% to fight inflation. In mid-October, the Central Bank of Hungary (MNB) introduced one-day deposit interest rate as much as 18 percent.
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