Domestic analysts were not stingy with their negative comments when we asked them about the recent price action, egg and potato price caps.
- Distortion only creates more distortions.
- The dream continues.
- They shot the domestic poultry industry.
- Well, not only sugar and oil at home here, but also eggs in stores.
- Not only in Austria and Italy but also in traditionally expensive countries like the Netherlands and France, people consider food to be cheap at market prices.
Bingo or hot pepper
After the previous price freeze, this is the icing on the cake, one of our sources said that we can slowly organize a bingo to see which of the thirty known dishes is next and forget about it.
Equilor Zrt. Lajos Török, chief researcher of , sees only negative elements.
“I see the future of the domestic poultry industry as very questionable. If chicken breasts and eggs can be sold at “bargain” prices, who makes them here? This move was the final nail in the coffin. “
In other words, although the loss of limited prices is borne directly by stores and chains, the process cannot be cut off in the middle of the supply chain, the expert believes that the perspective of the entire sector has disappeared.
Another of our resources uses plastic film:
“When chili is strong, it stings the throat, it stings the stomach, but it also has an effect when it leaves. So is a price ceiling. It increases the prices of other goods in stores to meet demand, but when a price ceiling is introduced, it stimulates inflation, because no one says that the prices of goods that are profitable today will fall. Didn’t think so, did you?
Items are missing
As analysts tell us, there is now a shortage of sugar and cooking oil, not only in Budapest, but also mostly in the countryside. Of course, the government may announce that food prices are rising or missing due to economic sanctions. However, many Hungarians also travel. Austria, Germany and Italy have the same permit, but why is food significantly cheaper there, why is inflation lower, and why are there no shortages? If someone compares a truly comparable product, for example, dry pasta from the same global manufacturer, or a well-known tuna brand, or a non-Hungarian but international butter, it is shocking, but usually 20-30 percent, and in the case of said pasta, sometimes 40-50 percent in the West. You see lower prices in countries.
How did we get here?
It wasn’t that long ago, and it’s actually quite a unique change. It should be added that there is more than one reason for this: higher sales taxes, retail tax and now price caps explain the increase in the general price level for “market” products.
On the other hand, the price range unfortunately does not contain inflation, even if it seems like it.
In other words, the price ceiling is misleading because the CSO will certainly show that the price of chicken breast, eggs and potatoes remains low, but only the inflationary basket if consumers can only buy similar but priced goods. No change, but the family will spend more.
Fire cannot be extinguished with petrol
If a sector is in trouble due to rising costs of labour, feed and energy, price limits can be nothing but distortion and destruction. Yes, of course, it’s sad that a significant portion of food has risen in price twice as fast as inflation.
Also, food price hikes hit the poor the hardest, as food represents 30-35 percent of their consumer basket, with energy already accounting for 15 percent.
David Nemeth, K&H analyst, told Telex. In other words, there is a social group in Hungary that, according to Economic Development Minister Marten Nagy, thinks food price caps will help with bad action and market distortion.
So, after his own “self-criticism”, the minister, for some political expediency, instead of removing the harmful measure, expands it further. But in reality, this cannot be an acceptable price, because it not only affects the “chains”, but also confuses the entire Hungarian economy.
It’s hard to choose
In Hungary the government abandoned it long ago. Of course, while there is no reason for the rich to get cheap eggs for an omelet by increasing the losses of chains, taking targeted action is not really easy. However, the government considers it a popular move to not only help those in need (even with the involvement of local governments), but also to take away scarcity phenomena and distorted incentives for all.
However, compared to fuel, food is a much less homogeneous product. There are so many types of ingredients that it is very difficult to decide what is a staple food and what is not. Also, not only the range of products but also the product chain is complex.
It has both advantages and disadvantages. If there are no store-bought eggs, instead of scrambled eggs, there is a hot dog for breakfast, and if there is no sugar, it can be sweetened in another way. A shortage hurts less than when you can’t refuel.
But it is also a problem that in the value chain of basic food products, whether it is eggs, sugar, milk, if there is a shortage or a decrease in supply, the sectors built on them also have to deal with the shortage caused by the increase. Confectionery, dairy processors, confectionery companies etc. demand population.
All in all, unfortunately, it is no coincidence that food inflation was best unleashed in Hungary, where all traders could sustain themselves by increasing the prices of other goods.
Presumably, there are also experts in the government, and this is all a dream, which may actually be an achievement, the “price office” no longer setting prices. However, the whole measure is permeated by some corny vote-maximizing math – and surely there are many who don’t see the over-complicated effect, who are just happy that eggs are cheap.
Of course, the more concerned can no doubt rightly perceive this as a favor, and can manipulate and sell goods at lower prices. Milk, potatoes, eggs, sugar – you can make a million gastroxodos from this amount of food.
On the other hand, lessons have been learned for professional bodies. What do the chains have to say, what do the trade unions have to say? They may have an idea of the cause or a well-known duffke will come. When criticism only inspires the will to act: “The more Antal Rogan is attacked, the more I protect him. If they attack the Felcsút light railway, it will go to Bicské or Lovasberény.”
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