Supermarkets in Hungary are not allowed to take more than a 10% margin on 30 essential food products, such as milk, meat, eggs, oil and sugar. The Hungarian government thus wants to combat food inflation.
No VAT reduction
Prime Minister Viktor Orban is taking the measure in response to what he considers ‘excessive’ price increases for some food products: eggs are said to have become 40% more expensive, butter and sour cream as much as 80%. Talks with supermarket chains, he said, did not lead to adequate proposals to keep prices down.
Therefore, from now on, those supermarkets should not take more than 10% profit margin on products such as chicken, pork, milk, potatoes, yoghurt, Trappist cheese, garlic and Paris sausage. The margin cap took effect last Monday and applies to all retailers with sales higher than 1 billion forints (2.5 million euros), Daily News Hungary reported.
Countries such as Croatia, Romania and northern Macedonia also took similar measures earlier – but they also lowered VAT rates on basic foods, which the Hungarian government does not intend to do. Observers expect retailers to simply compensate for lost margins with price increases on other products.
