Government Extends Food, Fuel Price Caps

Government

Photo by CC7 / Shutterstock.com

Hungary's government has decided to extend price caps on staple foods and motor fuel, Gergely Gulyás, the head of the Prime Minister's Office, said at a press briefing during a cabinet meeting break on Saturday, according to a report by news agency MTI.

The government rolled back prices for a number of staples, including pork, cooking oil, and flour, to mid-October levels from February 1 in an effort to dampen inflation.

The government has also capped prices at the pump at HUF 480/liter for both gasoline and diesel since November 15, 2021. Vehicles with foreign number plates were earlier excluded from the measure, and from late July, corporate vehicles registered in Hungary also became ineligible.

The food and fuel price caps, which were set to expire on October 1, will be extended until the end of 2022, Márton Nagy, the economic development minister, told the press briefing. He added that a freeze on mortgage rates would be extended by another six months until the end of June 2023.

Nagy said he had also supported the extension of the price caps, even though he continued to consider them "abnormal market intervention", albeit under "abnormal market circumstances". He added that the National Bank of Hungary (MNB) augurs a continued rise in CPI in the coming months, with inflation expected to decline only in 2023.

Gulyás said the extension of the price caps is justified by the "extraordinary situation" for which there is "no realistic chance" of improvement as long as sanctions against Russia that have driven up energy prices remain in place.

He added that Hungarian households will continue to pay regulated prices for gas and electricity, up to average consumption levels, saving them HUF 150,000-180,000 a month.

Gov't Approves Support for Energy-Intensive Businesses

Nagy said the government approved a support programme for energy-intensive SMEs in the production sector to run from October 1 until the end of 2023. Those SMEs will be eligible for state support covering half of the increase in their gas and electricity bills for a period of three months from October to December. They may also apply for up to 15% self-financing support for investments to improve energy efficiency, keeping them competitive in the long term. 

A condition for the support will be maintaining a headcount at at least 90% of current levels until the end of 2023.

Nagy said the scheme could support some 10,000 SMES, noting that the EU defines "energy-intensive" businesses as ones whose energy costs exceeded 3% of net revenue in 2021. The government will review the program after a period of three months and take a decision on its possible continuation, he added.

He said the government discussed two more schemes to aid big manufacturers by supporting energy-efficiency investments and preserving workplaces, adding that details of the programmes would be hammered out in the coming weeks.

ADVERTISEMENT

Czech Republic Manufacturing PMI Lowest Since May 2020 Analysis

Czech Republic Manufacturing PMI Lowest Since May 2020

Gov't Submits 2nd Package of Bills Related to Conditionality... Government

Gov't Submits 2nd Package of Bills Related to Conditionality...

Blue Chip Art and Passion Assets - Claudia Worthington Hess ... Podcasts

Blue Chip Art and Passion Assets - Claudia Worthington Hess ...

Magyar Posta to Close 35 Post Offices in Capital City

Magyar Posta to Close 35 Post Offices in Capital

SUPPORT THE BUDAPEST BUSINESS JOURNAL

Producing journalism that is worthy of the name is a costly business. For 27 years, the publishers, editors and reporters of the Budapest Business Journal have striven to bring you business news that works, information that you can trust, that is factual, accurate and presented without fear or favor.
Newspaper organizations across the globe have struggled to find a business model that allows them to continue to excel, without compromising their ability to perform. Most recently, some have experimented with the idea of involving their most important stakeholders, their readers.
We would like to offer that same opportunity to our readers. We would like to invite you to help us deliver the quality business journalism you require. Hit our Support the BBJ button and you can choose the how much and how often you send us your contributions.