The Hungarian government intends to remove price limits on basic food products starting from August 1st, according to the Chief of Staff of the Prime Minister, as stated in a press conference quoted by ESMagazine.

Hungary is experiencing the highest inflation rate in the European Union, but the annual rate has decreased for the fourth consecutive month in May, dropping to 21.5%.

Slowing inflation rate

Gergely Gulyas, the Chief of Staff to the Prime Minister, stated that the rate could decrease to 15% by August and reach a single digit, possibly earlier than December. The high base from last year will help decrease the rate during the summer months.

"Disinflation will accelerate during autumn," Gulyas said.

Price limits

Price caps for certain basic food products, including milk, sugar, flour, vegetable oil, and eggs, were introduced in February 2022. Despite the measure, food prices in Hungary increased by 44.8% annually in December last year.

In an effort to curb price increases, the government of Prime Minister Viktor Orban also imposed mandatory price reductions on food products by major retailers.

Gulyas mentioned that starting from August 1st, the magnitude of these mandatory price reductions will increase from 10% to 15%.

Challenging market

Last week, Tesco CEO Ken Murphy noted that the Hungarian market, in which British food products are an important player, has been challenging in recent years.

"There have certainly been some tough months in Hungary," he said. "Last year, the government injected quite a lot of stimulus into the market, and it kind of triggered quite a high rate of spending in terms of customers. And that sort of stimulus is not there this year."