Orban's Price Control Gamble Amid EU's Inflation Surge

Food price controls initiated by Prime Minister Viktor Orban have taken effect in Hungary to curb the country's high inflation, the EU's highest. With inflation rising, Orban introduces tax cuts and retail margin caps while Hungary struggles with increasing costs spurred by external factors.

Food price controls launched by Prime Minister Viktor Orban went into effect in Hungary on Monday as the country grapples with the highest inflation rate in the European Union. The move is a bid to control prices amid inflationary pressures that have been a significant concern for Hungarian households.

Orban's administration introduced tax cuts for mothers and imposed caps on retail price margins for 30 food groups to mitigate the soaring prices. The government has warned that if compliance is not maintained, these measures could be expanded to all food categories. Hungary has experienced an inflationary surge, with official data showing a 7.1% rise in food prices over the past year.

The policy is reminiscent of previous price controls, which experts say partially backfired as companies adjusted by raising prices on other products. Economist Peter Virovacz projects that inflation could peak at 6.5% in October. Observers are watching closely as these economic measures may influence future elections and put pressure on the National Bank of Hungary's policies under new leadership.

(With inputs from agencies.)