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Hungary’s leader orders price controls on basic foods as inflation spikes

BUDAPEST, Hungary (AP) — Hungary’s government will limit the profit margin for grocers on a number of basic food items, the prime minister said on Tuesday, a response to growing inflation hitting consumers in the Central European country.

Prime Minister Viktor Orban said in a video on social media that commercial grocers must limit their markup to no more than 10% of wholesale price on 30 different food items, a policy that would be in effect from mid-March until the end of May, but could be extended.

He said that the government would monitor grocers’ compliance with the policy, but didn’t specify which foods would be included in the requirement.

“In order to curb excessive and unjustified price increases, we have been negotiating with representatives of commercial chains in recent days,” Orban said. “Unfortunately, the vendors’ offers fell far short of our expectations.”

Inflation data released Tuesday by Hungary’s statistical office showed an annual inflation rate of 5.6% for February, while food prices were up 7.1% on the year. By contrast, average inflation in the 20-member eurozone was 2.4% in February, according to the European Union’s statistical office Eurostat.

Hungary, which isn’t a member of the eurozone, uses the forint as its national currency.

The data came as an “unpleasant inflation surprise” for Hungary, which “indicates increasing price pressure in the Hungarian economy with regard to more permanent inflationary trends,” Orsolya Nyeste, a macroeconomic analyst with Erste Bank, wrote in a note on Tuesday.

Hungary has frequently led the EU in inflation in recent years as a cost of living crisis has gripped the country. The populist government has pointed to external factors such as the war in neighboring Ukraine and EU sanctions against Russia to explain the yearslong inflation spiral, though prices in other regional countries like Poland, Romania and Slovakia haven’t risen nearly as steeply.

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