Fighting inflation: focus on food and fuel

By: Trademagazin Date: 2025. 01. 23. 12:01

From January 1, 2025, the government has raised the threshold for VAT exemption to 18 million forints, which affects approximately 850,000 businesses in Hungary. Minister of National Economy Márton Nagy highlighted in his InfoRádió Aréna program that the move is aimed at promoting the whitening of the economy and increasing entrepreneurial spirit. The government is also planning to reform other types of taxes, such as raising the thresholds for small business tax (kiva) to 5 and 10 billion forints next year.

Fighting inflation: food and fuel in focus

Regarding inflation, the minister said that the government will not ignore the rise in food and fuel prices. However, he does not consider reducing VAT to be an effective solution. He stressed that the government is in close dialogue with traders, producers and processors to address the situation. Currently, the prices of eggs and milk are considered the most critical. If necessary, the government is ready to intervene, emphasized Márton Nagy, adding that “the government has disciplinary power, which we are now enforcing.”

Real wage growth and economic turnaround

The Minister of National Economy considers a 5 percent real wage growth achievable this year, which he believes indicates an improvement in the financial situation of the population. People have money in their hands, consumer confidence is strengthening, and retail sales are brisk. The housing and car markets are also booming. Márton Nagy is also optimistic about the decline in interest rates, which could further increase economic activity.

However, the turnaround in the corporate sector is still to come. The Minister expects concrete commitments from banks to boost corporate lending, which he hopes to achieve during the consultations scheduled for next week.