Panic shopping, price increases expected in Hungary after price cap abolition

The Hungarian government will end the food price cap from 1 August. This could lead to a spike in the price of many foods, which could result in panic buying.

End of the price cap

The food price cap in Hungary will end from August. According to an announcement by Gergely Gulyás, Minister of the Prime Minister’s Office, the Hungarian government has extended the price cap until 1 August. As a result of the price cap, certain basic foodstuffs such as chicken, flour, sugar and milk were available at the same price in all retail outlets in Hungary.

Once the price cap ends, the products will not be immediately available at market prices, but prices will rise considerably. Levente Tóth, an expert at Bank360, believes that Hungary will see a glass half empty, half full situation.

“After 1 August, products that have been subject to a price cap so far will also be included in the range of goods subject to mandatory promotions,” the expert is quoted by Blikk, a Hungarian tabloid.

This means that retailers will have to offer goods at 15 percent below the purchase price. This gives shops a lot of leeway, as they can buy the same product at several prices, depending on the supplier.

Soaring prices, panic buying and shortages

Prices are bound to jump, although not as much as if there were no action. However, the expert believes that the inflationary impact of the price cap will not be reversed in August. The result could be a new wave of panic shopping in Hungary.