OKSZ: Retail margin cap has lost its purpose – government decision due in February

“The Hungarian inflation rate has moved back within the central bank’s tolerance band, and price increases for food sold in retail are nearing 0%. It is becoming increasingly clear that at the November decision point, the margin cap could have been – and should have been – removed from the system,” said Tamás Kozák, Secretary General of OKSZ.

Rising import share, shrinking room to manoeuvre

According to OKSZ, keeping the cap in place creates growing negative side effects across the supply chain. The association argues that retail chains have been left with fewer tools to respond to price pressure coming from suppliers, while the import share is increasing and domestic food producers and processors are being squeezed.

OKSZ also warns that local small shops and independent retail networks are at risk of further closures, as they struggle to compete under distorted pricing conditions created by capped-margin products.

Investment pullback and fewer price promotions

The association says retailers often sell the capped products at a loss, which in turn forces them to curb investments and limits their ability to run the level of promotional price discounts consumers have become accustomed to.

The government is set to decide again in February whether to maintain or extend the margin cap. OKSZ hopes that after “the missed opportunity” in November, the next decision will avoid further amplifying the economic and market damage the association attributes to the measure.