The measure achieved its goal, so it will be phased out from July 1, but at the same time, the government continues to operate the online price monitoring system in order to maintain and stimulate retail price competition.
With the compulsory sales - thanks to which families could get basic food such as bread, meat, milk or various vegetables at a cheaper price - the government broke down and then reduced the wartime inflation to a low level. The measure achieved its goal, so it will be phased out from July 1, but the government will continue to operate the online price monitoring system in order to maintain and stimulate retail price competition, the Ministry of National Economy (NGM) announced in its statement on Tuesday.
The mandatory action system was introduced by the government as of June 1, 2023, on the proposal of the Ministry of National Economy, in order to overcome the inflationary shock caused by the war and the failed sanctions, and to protect families and pensioners.
In August 2023, the government increased the extent of the mandatory campaign for traders with a turnover of over HUF 1 billion by one and a half times, and also significantly expanded the range of affected products. Pursuant to the provision, in the case of 20 product groups, the rate of mandatory promotions has increased from 10 percent to at least 15 percent, compared to the lowest price applied in the 30 days prior to the promotion. In addition, the mandatory promotion rules were extended to the previous 8 price-stop product types, which had to be offered at purchase price, or for at least 2 of these product types on a weekly basis, all products had to be offered at least 15 percent cheaper than the purchase price, the NGM recalled.
Thanks to the measure, families were able to buy products from basic food categories, such as poultry meat, at a significantly lower price; milk, cream and substitutes; cheese; bread; pastries; dry pasta, rice; fresh fruit; fresh vegetables.
The mandatory promotion system was efficient and effective, together with the online price watcher, it made a significant contribution to the government first breaking down and reducing inflation to single digits, and then reducing it to a low level of around 4 percent. Mandatory sales and online price monitoring have also generated merciless competition in retail. As a result, food inflation fell to 1 percent on an annual basis in recent months, and in May, the price of food decreased compared to the previous month.
As a result of the suppression of inflation, real wages have been rising again since September 2023, i.e. the income of families is worth more and more, which contributes to the gradual dissolution of the precautionary motive and, through this, to the growth of consumption. This is reflected in the months-long increase in retail traffic and in the tourist demand, which has reached a record level. All this helps to restore the economy and increase the rate of growth.
Examining the inflationary processes and the related system of measures, the government found that the mandatory promotion achieved its goal, but at the same time, increased competition between retail players must still be maintained, because it serves the interests of families. As a result of all of this, the government decided to introduce mandatory promotions from July 1, 2024, while continuing to operate the online price monitoring system in order to support competition, the NGM statement concluded.
MTI
Cover photo: MTI Photo: János Vajda
