Government takes another swipe at retail chains, calls for GVH intervention
According to the ministry, following the introduction of compulsory retail discounts, retail chains have implemented simultaneous and significant price increases for essential products, against which the Ministry of National Economy (NGM) is taking firm action and is initiating a competition investigation by the Economic Competition Authority (GVH). The Government has introduced the compulsory retail sales discounts system from 1 June 2023 on the proposal of the NGM. To ensure compliance with the rules, the government agencies acting as consumer protection authorities have taken strict action: they have inspected nearly 3,000 shops and imposed fines of around HUF 650 million.
According to the ministry's statement, the Government has continuously reviewed the inflation developments and the related system of measures and concluded in June 2024 that the mandatory action had reached its target, so it phased out the measure from 1 July 2024, while continuing to operate the online price monitoring system to maintain competition between retail outlets. However, it is clear from the daily price updates in the online price monitoring system that following the phasing out of the mandatory action, the largest retail chains have implemented simultaneous and significant price increases on the retail prices of fine flour, 2.8% UHT milk and sugar, among others, the ministry said.
On average, the biggest retail chains increased the price of producer-brand fine flour by nearly 80%, but some stores saw price increases of more than 100% for some flours. Prices for branded milk also increased by an average of around 45%, while prices for branded granulated sugar increased by an average of more than 25%. In addition, the prices of private label products were also increased, albeit to a lesser extent, also significantly, by an average of 30% for all three product types.
The Ministry of National Economy examined the situation from a consumer protection perspective and concluded that the behaviour of the retail chains in question is a cause for concern, that the price increases are excessive and that a competition investigation is therefore necessary into the simultaneous and significant price increases by the retail chains. On the basis of the information, the Ministry of National Economy is initiating an investigation by the GVH and is also requesting the Ministry's Consumer Protection Department and the GVH to take joint action against the unfair businesses, the statement reads.
