Food prices will increase in Hungary too

In the last couple of months food prices increased all over the world. Experts say prices have started to grow because demand for products with a higher added value has increased. Trade magazin asked Márton Szabó, senior researcher at Kopint-Tárki about the current situation. He told us that the current world trend will reach Hungary as well. The problem is that on average food product prices are already higher in Hungary than in neighbouring countries. Mr Szabó is of the opinion that the reason for this is that the VAT of food products is significantly higher in Hungary. In Hungary the price level of food products is 78 percent of the EU average, while in Poland it is only 63 percent. Kopint-Tárki’s expert added that an increase of 30-50 percent in agricultural base material prices entails an average 12-20 percent growth in food product prices (because base material costs constitute about 40 percent of food product prices). He told that this price increase was favourable for cereal farmers and unfavourable for animal farmers. According to him, agricultural base material prices are still 20 percent lower than at the price peak of 2007-2008. The European Union’s market is still very much protected, with a PSE value of 25-28 percent – in the US it is only 10 percent. In Hungary people spend 22 percent of their income on food, in India the same ratio is 50 percent, while in the US it is only 10 percent. Another extra tax on food products would increase the consumer price level and make the market smaller for famers.