In May, consumer prices in Hungary were reported to be 4.4% higher compared to the same month the previous year, with a 0.2% increase from April, according to the Central Statistical Office (KSH).

The Ministry for National Economy (NGM) indicated that food inflation was recorded at 5.9% year-on-year, while the inflation rate for perishable food items stood at 4.5%, and catering services saw an increase of 9.1%.

Compared to the previous month, food prices rose by 0.6%.

Gerlaki Bence, the state secretary responsible for tax policy, consumer protection, and trade at the NGM, attributed the mild increase in food inflation to seasonal price adjustments in the catering sector and rising producer prices for seasonal vegetables and fruits.

Regarding seasonal food items, an average price increase of 1.6% was observed month-on-month and 7.2% year-on-year.

Unique factors significantly influenced these changes:

- This year, new potatoes appeared later in most stores and in smaller quantities than last year, leading to higher prices in May due to limited supply.

- Additionally, the price of apples, which is typically lowest during the autumn harvest, has risen due to increasing storage costs and declining stocks leading up to the next harvest season.

The previous year's harvest was about 150,000 tons lower than in 2023, impacting purchasing prices for 2024.

The NGM announced that the Hungarian government remains committed to tightly controlling inflationary processes.

The government emphasizes that rising inflation negatively impacts economic growth and complicates the daily lives of Hungarian families and retirees.

To counter arbitrary and excessive price increases, the government has introduced a price margin reduction measure effective from March 17, 2025, covering 30 categories of food products, regulating that the retailer's profit margin cannot exceed 10% compared to the average margin from January 2025.

Since the introduction of this regulatory measure, nearly 1000 products in 26 categories can be monitored daily through the online price monitoring system.

As a result of government initiatives, prices of more than 90% of the monitored products have decreased, with an average drop of around 20%.

The impact of margin reduction has been apparent in the inflation of perishable products, which saw a decrease in inflation from a peak of 7.1% in the beginning months of the year to 4.5% in May.

An additional 1400 food items, not covered by the margin reduction, remain available for monitoring on the online platform.

The NGM is also continuously tracking retail pricing practices based on data from online cash registers.

Gerlaki noted that available data indicate there is no evidence of cross-pricing among those affected by margin reduction, meaning that price increases on non-regulated food items are not happening concurrently.

The slight rise in officially reported food inflation is not linked to retailers increasing their prices or profit margins.

Furthermore, rising costs are not limited to food items but also affect various essential expenses, including household and hygiene products.

As a result, from May 19, 2025, the margin regulation will be extended to an additional 30 categories of non-food items, such as detergents, shower gels, and baby care products.

This non-food regulation pertains to drugstores and stipulates a maximum margin of 15%, aligned with the average margin applied in January 2025.

The measures concerning drugstore products have shown positive results, with average prices of affected products decreasing by over 25%, significantly contributing to maintaining consumer purchasing power.

The consequences of this initiative are expected to first reflect in the inflation statistics for June.

Discussions are ongoing across multiple fronts, with successful negotiations occurring with financial institutions, insurance companies, and telecommunication firms regarding the freezing of service and account management fees, resulting in voluntary price limitations.

Additionally, recent announcements included measures to address pharmaceutical pricing, with commitments from the Association of Innovative Pharmaceutical Manufacturers (AIPM), the National Association of Pharmaceutical Manufacturers (MAGYOSZ), and Richter Gedeon Nyrt.

to voluntarily reduce prices.

According to the NGM, these measures are expected to have a significant impact on inflation over the summer months.

The government's objective is to reduce inflation below 4% and to maintain cold food inflation consistently below 5%.

Gerlaki emphasized that the NGM will continue to monitor the price trends of both regulated and non-regulated food and household items, indicating that further actions may be taken to stop price increases if cross-pricing becomes apparent among non-regulated products.