In early October, Belarusian strongman Alexander Lukashenko declared that “all price increases will be banned”. As usual, the dictator’s statements were widely mocked outside Belarus. Yet Hungary has already shown it can be done.
Since February, supermarkets have been forced to freeze the prices of six essential food products – granulated sugar, flour, milk, pork legs, chicken breast and cooking oil – at the levels they were at on October 15, 2021.
The government decree also required retail chains and small shops to ensure at least the same stock in the shop as before. They receive no subsidies or other support.
Initially, prices were frozen until May 31, with the government citing a need to protect families but saying nothing about the more important goal of winning April’s general election. As inflation skyrocketed, the freeze was extended until the end of the year.
The move may indeed bring relief to Hungary’s poorest. But supermarkets are becoming increasingly inventive in trying to extricate themselves. The grocery chains make up the shortfall by hiking the price of other products. Losses on chicken breast, for example, are made up for on legs, which cost 61% more than a year ago.
Some retailers are restricting the quantities their customers can buy, forcing makers of homemade plum jam to go from shop to shop buying a kilo of sugar in each. Many shops refuse to sell sugar at all or offer unregulated substitutes at much higher prices. Some hide the cheaper items at the back of the shelves or label them misleadingly.
International food chains can make up the losses more easily but have nevertheless lodged a constitutional complaint that the government is curtailing their right to free pricing. The judges were all appointed by Viktor Orbán’s ruling Fidesz so are unlikely to rule in their favour.
