Latest data by the Hungarian Central Statistical Office shows that the price margin caps on groceries introduced in the middle of March were able to slow down inflation, if only for a short time. At the same time, price margin caps have some adverse effects.
Inflation in May 2025
According to KSH data for May 2025, prices went up by 4.4% compared to May 2024, and by 0.2% compared to April 2025. If we consider only the year-on-year figures, this still shows a trend of decreasing inflation since the start of 2025, which is good news. The inflation month by month has also been relatively low this year. The price margin caps introduced as of March 17 on basic groceries probably contributed to this effect, alongside their extension on various household products as of May 19. However, contrary to expectations, they were not able to entirely stop price increases.
| Price increases | Year on Year | Monthly |
| January | 5.5% | 1.5% |
| February | 5.6% | 0.8% |
| March | 4.7% | 0% |
| April | 4.2% | 0.2% |
| May | 4.4% | 0.2% |
To get a better idea of what this means for consumers, it makes sense to take a quick look at prices by the group of consumption. Compared to last month, inflation is steadily below 1%, and in some categories, prices even decreased.
| Price increases | Year on Year | From last month |
| Consumer prices | 4.4% | 0.2% |
| Groceries | 5.9% | 0.6% |
| Services | 5.9% | -0.1% |
| Alcohol and tobacco | 7.3% | 0.9% |
| Electricity, gas, other fuels | 5.3% | 0.8% |
| Motor fuel prices | -4,8% | -1.9% |
| Consumer durables | 2.2% | n/a |
Price margin caps and inflation
Currently, there are two types of price margin caps in effect in Hungary: one for basic groceries at 10% since March 17, and one for various household and drugstore products at 15% since May 19. They are supposed to stay in place until August 31. While they have proved to be somewhat effective in reducing the prices of some essential items upon introduction, a price hike is expected once these measures are repealed. Since that would not reflect well on the government, experts now expect these measures to remain in place at least until the next general elections in May 2026.
Another (predicted) effect of the price margin caps is that small retail stores that were not required by law to decrease their margins now cannot compete with the artificially low prices forced on big retail stores. Many are making preparations to close down due to the decrease in their sales. The National Commercial Association is doing its best to voice these concerns, but so far, they remain unheard.
At the same time, government officials have started voicing expectations that providers in other sectors start decreasing their prices, including banking, telecommunication, banking, and insurance. Now many worry that price margin caps might be introduced in these sectors too by extending the scope of affected products.
Helpers Finance at your service
Whether or not your Hungarian business is affected by price margin caps, a good accountant can make your life easier by ensuring precise bookkeeping and compliance with current regulations. Helpers Finance provides accounting, payroll, HR services, and advisory to small and medium-sized businesses, with special expertise in working with foreign owners. Should you need assistance in these areas, feel free to contact us.
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