Patching the hole

By: szekacs.tibor Date: 2025. 03. 28. 09:47

In the past the price caps introduced as a reaction to high food inflation also showed their negative effects, in the form of supply difficulties or even above-average price hikes for product categories not affected by the regulation.

This article is available for reading in Trade magazin 2025/4.

Guest writer:
Tibor Székács
president
Chain Bridge Club

In spite of the mixed experiences with the impact of the price caps after the phase-out, a similar regulation, a new price freeze came into force on 17 March 2025 and is expected to last until 31 May. Once again the only actor in the value chain footing the bill is grocery retailers, instead of a proportional burden-sharing – it is them who must finance the losses made on selling these products. What are the effects of the measure affecting 30 product groups and around 1,000 products?

For consumers the effect will be positive in the short term, as a large part of the prices will decrease noticeably. For retailers this step is financially painful and for smaller, mainly Hungarian-owned businesses it could be fatal in terms of lost margins and/or turnover diversion. However, the burden of artificially maintained prices will sooner or later fall on consumers again – it is only a matter of time: the model isn’t sustainable in the long run. I am positive that the development of truly sustainable solutions is only possible through action plans based on professional dialogue and involving the different associations, organisations and interest groups. The statements from the last few weeks show that there is openness for this from the representatives of the trade. //