BUDAPEST, Nov 7 (Reuters) – The Hungarian government could decide within days on new food price caps to curb inflation, which could peak around 25% by the end of the year , Development Minister Marton Nagy told Inforadio on Monday.
Prime Minister Viktor Orban announced last month that the government could expand the scope of price caps on fuel and some staple foods over the next few weeks, without giving details on which food items might be affected.
The government capped the price of milk, sugar, flour, sunflower oil, pork leg and chicken breast in February to try to shield households from soaring costs, while fuel prices and mortgage rates were also capped.
In order to curb inflation, price caps must be maintained, Nagy said. “In the event of a food price cap, the range of products subject to a price cap may be expanded, and the government may make a decision on this in the coming days,” he said.
“The future of these price caps will be determined by inflation, which has yet to peak,” he said.
He said October inflation had edged up to 21% and “it could be close to 25% by the end of the year when it could turn around.”
October inflation data is due later this week.
Nagy said the economy could grow more than 4.5% this year, before slowing next year.
Hungarian inflation jumped to over 20% in September, beating market expectations, fueled by a 35.2% rise in food prices and a 62.1% rise in energy prices after Orban’s government reduced utility bill subsidies for some households.
Nationalist Orban has sharply criticized the European Union for imposing sanctions on Russia over its invasion of Ukraine, saying it failed to weaken Moscow significantly while causing oil prices to spike. food and energy.
Economists polled by Reuters see average inflation rising to 15% next year from an expected 14% in 2022, with price growth exceeding the central bank’s target range of 2% to 4% even in 2024.
Combined with drops in the forint to record lows, soaring inflation forced the National Bank of Hungary to revise its monetary policy framework in mid-October as an emergency measure and introduce a rapid deposit tool at a rate of 18%. This supported the forint.
Reporting by Krisztina Than and Anita Komuves; Editing by Alison Williams
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