They don't buy fruit, ham is a luxury

Food prices have risen dramatically across Europe in recent months, jumping 19,6 percent in March from a year earlier and becoming the main driver of inflation as energy prices fell. However, in Hungary, food prices rose by more than 45 percent for the year, according to Eurostat data, far above the next highest figure of 29 percent in Slovakia.

The Associated Press agency writes that such price increases are hitting Hungarian consumers hard and forcing them to change their habits when it comes to choosing food, and leading companies to think about changing their offer.

"I don't buy fruit. We get potatoes from the municipality so we don't have to buy them, but onions have become expensive," pensioner Magodolna Gozon (83) from Budapest told AP. She added that she rarely buys meat.

Silvija Bukta, manager of the butcher shop in the Central Market in Budapest, said that habits have changed so that citizens really think about what they buy.

"We've almost reached the point where sausage and ham are considered luxury food items," she told the AP.

"Also, we have to buy less because the prices are higher and we know there aren't as many buyers and we certainly choose more carefully," said Bukta.

Some types of food in Hungary have almost doubled over the past year. Items such as eggs, milk, butter and bread have risen in price by 72 to 80 percent, putting pressure on citizens' budgets in a country where the median net income is just over 800 euros per month, writes AP.

While most European economies are facing similar difficulties as the war in Ukraine fuels a cost-of-living crisis, the inefficiency of Hungary's agricultural and food industries and the historic devaluation of the forint have made "extreme inflation" worse in that country than anywhere else in the EU, says Peter Virovac, chief economist at ING Hungary.

"There is a drought everywhere, energy prices have risen everywhere, procurement costs have increased everywhere. But if production is not efficient enough, it will be much more difficult for domestic producers to pay those costs," he said.

In order to survive, not only farmers, but also restaurants, bakeries and other businesses, increased prices for customers and changed the offer to avoid the most expensive ingredients.

Cafe Čiga, a restaurant and bar on a square in the center of Budapest, took hamburgers and fries off the menu last year due to rising prices of ingredients such as meat and oil, said general manager Andras Keleman.

"Raw materials have become more expensive. Some by around one hundred percent. Vegetables, especially in the winter, and some types of meat and meat products have become incredibly expensive," he told AP.

This led to a jump in the overall inflation rate in Hungary to 25,6 percent, also the highest in the EU, where the average slowed to 8,3 percent last month. The AP reports that the rise in the cost of living has led to a rapid increase in wages, which are additional costs that companies partially pass on to customers.

"All our costs are constantly increasing and in the meantime we have to increase earnings," says Kelemen. "There's a certain point above which we don't want or dare to increase selling prices, but a 30 percent increase is typical."

Although Hungary is a major producer of wheat, corn, oilseeds and meat, about 30 percent of food items in its supply chains are imported, according to a 2022 study by the National Food Safety Authority. The forint weakened by more than 40 percent against the US dollar last year. and over 20 percent compared to the euro, which led to the fact that import costs, and therefore prices in stores, are much higher, said Virovac.

"It simply means additional costs for suppliers, which they ultimately try to pass on to consumers," says the Hungarian economist.

AP points out that food prices in Hungary are falling slightly compared to the peak of almost 50 percent in December. However, a ban on grain imports from Ukraine that Hungary, Poland, Slovakia and Bulgaria recently imposed because of a glut they say is hurting local farmers could add to food inflation, says Jan Mitchell, an economist and one of the Center's Europe program directors. for global development.

Virovac, however, points out that people are spending less as their purchasing power and savings decrease, so they are likely to be unwilling to pay more for bread and other foods produced locally, preventing suppliers from passing on additional costs.

"We've gotten to the point where there's been such a rise in prices and such a drain on household reserves that people have actually started to tighten their belts and spend a lot less," Mitchell said.