Economy 9 May 2025, 9:14am

Retail chains respond to Hungary's April inflation data

Portfolio

The National Trade Association (OKSZ) highlights that food price levels have decreased and the margin cap has achieved its goal, therefore it can be phased out at the end of May as originally planned.

According to the organisation, the data clearly shows that retailers have not passed on any pressure to customers.

OKSZ is responding to the April inflation data released this morning, which showed a year-on-year consumer price increase of 4.2% in Hungary. Analysts polled by Portfolio expected inflation to drop to 4.0% from 4.7% in March.

The margin cap was fully reflected in the price index in April. The food price regulation started on 17 March, but as the Central Statistical Office's price collection period ends on the 20th of each month, it was only enough to prevent an increase in the average monthly food price level in the month of its introduction.

It was already known in advance that prices for the product group concerned had fallen by around 18% on average compared with the period before the margin cap, and that this should be reflected in the April price statistics.

Indeed, the KSH recorded a 1.3% fall in food prices on a monthly basis.

This is slightly less than expected, as the question was whether annual food inflation would tame from 7% to below 5%, but the KSH reported a 5.4% rise.

Are expectations too high?

According to the OKSZ, it also appears that

market expectations of the impact of the margin cap were too high.

Maintaining the measure can only bring temporary results in the future, while price tensions are building up under the surface and are more likely to surface every month. However, the margin cap makes it difficult for retailers to fulfil their role as intermediaries between producers, suppliers and customers.

OKSZ remains open to any professional consultation with trade policy makers on what regulatory environment would enable one of the most important sectors of the national economy to contribute more to economic growth.

The 10% margin cap on selected food products took effect on 17 March and should remain in place until 31 May. However, the government announced a 15% margin cap on 30 product categories to be in place between 19 May and 31 August, which suggests that the original margin cap will not be phased out at the end of this month.

In fact, analysts in a recent Portfolio survey think that margin caps will remain in place until after the general elections next spring.