Hungary's government rejected a proposal by Minister of Economy and Transport János Kóka to raise the base price of natural gas by 5% and decided to cut subsidies on gas bills, business daily Világgazdaság reported.
Hungary will set household gas costs based on income from January 1, according to the newspaper. The price will remain unchanged for families with monthly per capita income of less than Ft 51,600, or twice the minimum amount of old age pension, and increases will be gradual up to 72% for those earning more than Ft 180,600 per capita a month.
Hungarians use more natural gas than any European country except the Netherlands and the government has kept the price artificially low, a Bloomberg report said. The government plans to cut spending on subsidies to Ft 100 billion forint next year from Ft 160 billion this year. An increase in the price of natural gas from September 1 was one of the main reasons inflation accelerated to a two-year high in October. The annual rate almost tripled in six months, forcing the central bank to raise interest rates every month since June.