Ministry of Finance Highlights Impact of High Fuel Prices on Consumer Spending
In a revealing statement, the Ministry of Finance led by Márton Nagy has indicated that the main reason people are cutting back on spending, including essentials like food, is due to the high cost of fuel.
According to the ministry, fuel prices have surged by 60 to 80 forints per liter compared to last year, posing a threat not only to household consumption but also to economic growth and government tax revenues.
The statement titled 'Fuel Prices Significantly Impact Family Lives' points out the grim reality of skyrocketing fuel costs:
- It is noted that alongside food and healthcare, fuel expenses constitute the largest portion of household expenditures.
- Families are now forced to spend an additional more than 60 forints (64 forints) on petrol and nearly 80 forints (76 forints) on diesel per liter compared to last year’s prices.
- This price increase of 11 and 13 percent, respectively, has directly contributed to an annual inflation rise by about 0.6 to 0.7 percentage points.
- The hike in fuel prices has sensitively affected consumers, leading to decreased demand.
- This decrease is hampering the recovery of consumption.
The Ministry, under the leadership of Márton Nagy, attributes the reduced consumption across the board to the high cost of fuels. Furthermore, given that Nagy counts on the surge of domestic demand to drive economic growth and balance the budget, the steep fuel prices threaten these expectations.
In response, Minister Nagy has hinted at government action to reduce fuel prices, not excluding the possibility of another price freeze. On Nagy’s instruction, the Hungarian Central Statistical Office (KSH) compiled a regional fuel price statistic from publicly available EU data. The analysis shows domestic prices are indeed higher than the "regional average." However, the statistic is experimental and has been criticized on several fronts, including the selection of countries included in the statistic and the exclusion of Hungary from the "regional average."
This stance by the Ministry of Finance sheds light on the severe implications of fuel price increases on the Hungarian economy and signals potential government intervention to mitigate this pressing issue.