Francis Berger
  • Blog
  • My Work

Inflation Games Retailers and the Government Play in Hungary

11/11/2022

18 Comments

 
Food and energy inflation in Hungary is among the highest in Europe. Official reports peg food inflation at 20%, but my experience informs me that inflation on some food items, such as cheese, bread, butter, and beef, is closer to 100% and, in some cases, much higher.

Yes, that's right. The cost of bread and butter have doubled in the past six months or so. The government's solution? Price fixes on certain specific items - 2.8% milk, some types of bread, chicken breast, etc.

The retailers solution? Stock very little of the price fixed goods and a great deal of the inflated substitutes. This allows the price fixed goods to run out almost immediately, leaving the majority of shoppers stuck buying the more expensive alternatives, like 1.5% milk, other types of bread, whole chickens, etc.

To put this into some sort of perspective, I suppose it would be helpful to mention that the average Hungarian takes home the equivalent of about 700-800 US dollars a month. A year ago, 200 grams of butter cost about 1.25 USD. The price now is 3.80 USD. Three-eighty for butter might not sound expensive to a Western European or a North American making a Western European or North American salary, but for a 700-800 dollar-a-month Hungarian, 3.80 USD from 1.25 USD is a death knell.

The average Hungarian used to spend around 300 USD a month on groceries. That same family now spends 600-700 USD on food a month, which is the equivalent of an entire monthly salary for most people. 

​What is especially striking about the inflation in this part of the world is its gratuitousness. Despite everything, prices should not be this high. Yet for some mysterious reason, they are. I did a little investigating and discovered that the prices grocery retailers pay for wholesale goods are still a fraction of what they end up selling these same goods for in stores. The markup margins are clearly criminal in some cases. 

Eggs are a good example. Last year, retailers bought eggs from wholesalers for about 8-10 cents per egg, and then sold the eggs in their stores for about 11-14 cents per egg. This year, the wholesale price for an egg is around 13 cents, but the retail price is a whopping 25-31 cents per egg -- double or triple the wholesale price. In some places, that's called price gouging. Here in Hungary, it's just business in a "war inflation" environment. 

In an effort to save the day -- yet again -- the government donned its Superman cape and has stepped in and extended the price fix to eggs, setting the maximum price at around 21 cents per egg, which is still nearly double last year's price. God bless them in their commitment to "protect Hungarian households". Retailers have grudgingly responded by ensuring that sudden and inexplicable egg shortages are now almost guaranteed going forward.

Thankfully, I have my hens, but I don't have a cow, which means the System gets me via dairy products like milk and cheese . . .  if I can find any that I am willing to buy at these inflated prices . . .  
18 Comments
Mike Bryant
11/11/2022 18:43:30

Tradingeconomics.com gives the official rate of food inflation for Hungary at 43% in October up from 37.6% the UK rate is 14.5% I assume these government numbers are all massaged downwards to make them easier to swallow so to speak. Everybody in the UK are still spending like a drunken sailor on shore leave, hyperinflation here we come.

Reply
Francis Berger
11/11/2022 19:03:38

@ Mike - Indeed. I think the inflation we are experiencing is a good example of the World Economic Forum calls "public-private partnership".

Also, it's quite revelatory to consider that an official food inflation rate of 43% (43%!!!) here in Hungary is a "massaged down" number. Where did they start massaging it downward from to get to the palatable 43%?

Reply
bruce g charlton
11/11/2022 19:10:04

I don't suppose that food price inflation is due to retailers increasing prices - why didn't they charge the much higher prices last year, if they could have?

But maybe the food retail is now a monopoly or a cartel - and they can just set whatever price they want - like Big Pharma; and the consumer has only Hobson's Choice - take it or leave it.

As Vox Day mentioned in his blog today, much of the current economy is fake - and money losing corporations are (for the time being) kept going and indeed expanded, by continual and increasing infusion of tax money via not-obvious subsidies. meanwhile, the actual production of useful/ essential goods in chronically declining because it is chronically being deliberately destroyed.

(The Great Reset demands that global population must be reduced to c 10% or less of current levels *somehow*, yes? Every little helps - like mass starvation.)

Aside: The fact that there are shortages on price fixed goods (if this is for a long time, anyway) suggests to me that these prices are fixed too low, so demand at that cost exceeds supply. )

I presume that the inflation - which is very bad indeed here in the UK, although not as bad as you describe for Hungary - is due to the deliberate destruction of the economy (including farming, and including international trade) starting with the birdemic stuff; and then *massive* money printing from summer 2020 in the so-called 'stimulus' packages (which did not/ was not allowed to, stimulate economic growth - because of crushing bureaucracy, affirmative action, spiraling 'green' nonsense in all its manifestations etc, etc).

This extra money mostly went into the pockets of the ultra rich; which standard of living accelerated and continues.

I heard the UK Chancellor of the Exchequer discussing inflation in a radio sound-bite, and what came across to me is that he regarded it as a minor issue, a matter of people 'making a fuss' that needs 'managing' -- nothing *really* vitally-serious like the climate emergency, the fifth booster peck, or the urgent imperative to destroy the Fire Nation.

Reply
Francis Berger
11/11/2022 21:24:46

@ Bruce - The food inflation here began when the birdemic kicked up in 2020:

https://www.francisberger.com/blog/how-are-food-pricesavailability-in-your-part-of-the-world

And it has been accelerating ever since:

https://www.francisberger.com/blog/a-few-thoughts-about-the-inflation-situation

As far as I can tell, it has been worse here than most places in the West, and it doesn't show any signs of stopping. Unfortunately, the retailers here (mostly multinational grocery chains headquartered in places like the UK, Germany, and Holland) do play a big part in it, and their actions have nothing to do with supply and demand or Economics 101

The economy here in Hungary is totally fake, and it has been for some time. As I mentioned in the post, the average salary here tops out at about 800 USD a month. The low wages have been a major incentive for corporations and manufacturers to set up shop here to exploit the cheap labor costs.

Until quite recently, Orbán et al. have been able to mask these ridiculously low wages by subsidizing utility bills, public transport costs, and shielding the public from high house taxes, but the "energy crisis" has ended that charade.

Hungarians now find themselves in the unenviable position of having to pay western prices for everything without the benefit of earning western salaries. The government is attempting to keep the charade going by price fixing everything from petrol to food, but they can't do that forever. A reckoning is coming.

I completely agree with your assessment about where all of this is ultimately coming from. For me, it's just a continuation of the demonic pressure that was unleashed in 2020, and I treat it accordingly. Though I focus on earthly bread in this post, my main focus is on spiritual bread.

Otherwise, I do the best I can to keep costs low. I live a fairly simple and spartan life anyway, and I'm fortunate enough to be in the countryside where I can buy all kinds of food directly from growers and farmers, thereby sidestepping the inflation a bit here and there.

But I have no illusions about where all of this heading. Nor do I have any illusions about how bad this may/will actually get going forward.

Reply
Carol
11/11/2022 20:38:21

Well, your wife will probably hate me for this, but I still think you should consider getting a couple sheep -
- think about it, milk products and wool...could be a great savings in the long run!
;^)

Reply
Francis Berger
11/11/2022 21:26:41

@ Carol - Well, I *do* have that empty lot in the neighboring village . . .

Reply
Lady Mermaid link
11/12/2022 01:36:27

Eggs is the biggest indicator of inflation. A dozen Walmart brand eggs used to cost 68 cents. Now it's $3.00 per dozen. From what I've heard from warehouse retailers, clothes have piled up and they're desperate to get rid of them as clothing sales drop.

Unfortunately living in an apartment there's not much food production I can do. My father managed to grow a few tomatoes in the small porch. A family at our local church has been kind enough to sell eggs from their backyard. My biggest hurdle is to get out of credit card debt.

The plot will truly thicken if Algeria joins BRICS as they have applied to do so. The energy situation w/ Fire Nation is going to test the limits this winter. Algeria aligning w/ Fire Nation is going to be painful. It's important not to fall into despair but to develop spiritual freedom as the System tailspins.

Reply
Francis Berger
11/12/2022 17:38:07

@ Lady Mermaid - The price for eggs is the same here as it is in the US; the big difference is salary. As I mentioned in the post, Hungarians make about 700-800 USD a month - so three dollar a carton eggs are a bit more painful here. And eggs are just the tip of the iceberg over here.

Of course, this is nothing new in Hungary. Inflation and massive price swings have always been part of the landscape. In fact, Hungary lost its previous currency due to hyperinflation, which remains the worst case of hyperinflation ever recorded -- even worse than what happened in Germany and Zimbabwe:

https://dailynewshungary.com/100000000-billion-hungarian-pengo-the-worlds-highest-denomination-ever/

Reply
Jeffrey Cantrell
11/12/2022 02:51:32

I can’t help but ask whether the stark proportional retail price increase is due to more than just greed. For example, what has happened to energy costs to keep lights and refrigeration on? I’m sure trucking costs to get the goods to the store have also risen dramatically. What about wages? I’m sure there is a whole list of costs that contribute to these prices. I’m not saying the retail grocers are NOT gouging customers, but I can’t get outraged at grocers without more. What I do know is that everyone is being attacked by the system, individuals and businesses.

Reply
Francis Berger
11/12/2022 17:42:42

@ Jeffrey - Energy and fuel prices have risen here, but they've risen everywhere else in Europe as well. Wages are very low compared to the West. Currency devaluation has played a big part in the higher prices here, but it doesn't explain everything.

Here's how you can tell there's something fishy about retailers in Hungary. The major food retailers -- Lidl, Tesco, Aldi, Spar -- are the same retailers you find in other European countries, yet the prices for most goods in these stores are somehow more expensive in Hungary than they are in a "wealthy" country like Germany, where wages and taxes are higher. Hmmmm . . .

Reply
Jeffrey Cantrell
11/13/2022 01:28:29

Agreed, it looks like something really is rotten in Denmark ( or Budapest).

Anti-Gnostic
11/12/2022 02:57:33

That's sounding pretty bad. Lots of economic ignorance. What's the tax situation like?

Reply
Francis Berger
11/12/2022 17:47:23

@ Anti-Gnostic - There's a 27% value-added tax on practically everything, but business taxes are low. Income tax is about the same as the VAT, but property taxes and insurance are very low.

It's not economic ignorance.It's the economic price of being a vassal state of the EU.

Currency devaluation has been a problem for about two or three years. That doesn't help.

I get the sense all countries will experience this sort of pain soon if they aren't already. Hungary is just a canary in the coalmine, so to speak.

Reply
lea
11/12/2022 07:05:34

A local alternative podcast i've been keeping tabs on is still pursuing the economic angle and possible 'fixes'. The latest episode features a well informed fellow that was very early to the party spotting strange occurrences around Ukraine, and generally one of the few honest 'investigative journalists' around these parts. He started writing about that stuff in late 2014 before anyone in the mainstream took notice, but is still invested in the narrative right now, after the last couple of years.

I noticed a similar trend in 'alternative financial circles' in general; they have tended to be ahead of the curve coming to the conclusion that 'something is fundamentally not right' but many of them concluded that all of it was a sideshow to maneuvering the financial system at large.

This ties in to my even wider observation that many people coming at 'the current everything problem' are generally far too fixed on their personal vantage points, ignoring the unpleasant idea that we might be dealing with system-wide corruption. Mistaking incompetence for deliberate evil. And most importantly, not coming to the obvious conclusion that this is truly the tail wagging the dog, in a way that would be comical if it was not quite so destructive.

However solutions are always possible, we just need more holistic thinking and action. And yes that involves a degree of deindustrialization, many aspects of that were never important anyway. Chip production, legitimate medicine manufacture and a few other things are worth protecting, everything else is redundant bullshit.

Reply
Francis Berger
11/12/2022 17:53:28

@ lea - "This ties in to my even wider observation that many people coming at 'the current everything problem' are generally far too fixed on their personal vantage points, ignoring the unpleasant idea that we might be dealing with system-wide corruption. Mistaking incompetence for deliberate evil."

Yes, that nails it, and that's what I've been trying to communicate via this blog since 2020. The agenda they are trying to push through involves breaking everything down to build it back up. It's deliberate. And due to this motivation and the massive destruction it is causing, it is evil. Having said that, I don't think they'll succeed in the "building back" stage because there won't be enough left to build back from. This positive from a spiritual perspective, but quite negative from a physical/material perspective, at least initially.

Reply
William Wildblood
11/12/2022 13:20:57

Inflation on things that count, specifically, food is at least double the official rate in the UK. This also means that anyone with savings is seeing those gradually whittled away but that has been the case with low interest rates for 20 years. Interest rates may have risen slightly but nowhere near enough to keep up with inflation.

Regarding eggs, I saw a video in which an egg producer stated that though his production costs have risen he gets paid the same by the supermarkets who then put an increased markup on the eggs because production costs have risen.

Bruce is surely right in saying that there is a deliberate destruction of the economy going on here. People will be made to be increasingly dependent on the state. This will spread into the middle classes. We knew this was coming. Now it's a lot nearer but for those who are spiritually prepared, which I imagine is everyone reading this blog, the material hardships will be put into perspective.

Mind you, when theory becomes reality it's still a challenge!

Reply
Francis Berger
11/12/2022 18:10:09

@ William - Yes, well put. Spiritual preparation is key. Thankfully, Jesus said a great deal about fretting over earthly bread and material hardships.

Concerning the egg production, this has been my experience as well. The price of feed has increased about 20%. I know this because I have hens. Even then, the price I pay to "produce" an egg is far, far lower than what the stores currently sell them for.

Here in Hungary, retailers pay the same same wholesale price they always have, but they mark up the eggs by 100-130% instead of the conventional 25%.

Another example is an apple orchard from which I purchase apples. This farmer charges 65 pence for a kilo of apples, regardless of variety. The price has not changed at all since 2016.

Here's the kicker. I asked the farmer why he hasn't raised his prices. He informed me he still makes a profit at 65 pence despite rising costs, and that he would rather sell his apples to the public at 65 pence a kilo than sell them to the retailers, who are unwilling to pay him more than 40 pence per kilo! At the stores, apples range from 1.20 to 2.00 pounds! If that's not price gouging, then I don't know what is.

Reply
NLR
11/12/2022 22:18:57

That's an informative story about the apple farmer. I have been convinced for a while now that the official explanations for the increase in the cost of living from the early 20th century to now, especially from the last quarter of the 20th century onward don't tell the whole story.

At this point, official communications about the economy or cost of living are only telling people what the system wants them to hear, not the real way things work.


Your comment will be posted after it is approved.


Leave a Reply.

    Picture

    RSS Feed

    Blog and Comments

    Blog posts tend to be spontaneous, unpolished, first draft entries ranging from the insightful and periodically profound to the poorly-argued and occasionally disparaging.
     

    Comments are moderated. Anonymous comments are never published (please use your name or a pseudonym). 

    Emails welcome:

    f er en c ber g er (at) h otm   ail (dot) co m
    Blogs/Sites I Read
    Bruce Charlton's Notions
    Meeting the Masters
    From The Narrow Desert
    Synlogos ✞ Aggregator
    New World Island  
    New World Island YouTube
    ​Steeple Tea
    Berdyaev.com
    Adam Piggott
    Fourth Gospel Blog
    The Orthosphere
    Junior Ganymede

    Archives

    March 2023
    February 2023
    January 2023
    December 2022
    November 2022
    October 2022
    September 2022
    August 2022
    July 2022
    June 2022
    May 2022
    April 2022
    March 2022
    February 2022
    January 2022
    December 2021
    November 2021
    October 2021
    September 2021
    August 2021
    July 2021
    June 2021
    May 2021
    April 2021
    March 2021
    February 2021
    January 2021
    December 2020
    November 2020
    October 2020
    September 2020
    August 2020
    July 2020
    June 2020
    May 2020
    April 2020
    March 2020
    February 2020
    January 2020
    December 2019
    November 2019
    October 2019
    September 2019
    August 2019
    July 2019
    June 2019
    May 2019
    April 2019
    March 2019
    February 2019
    January 2019
    December 2018
    October 2018
    September 2018
    July 2018
    May 2018
    March 2018
    February 2018
    January 2018
    December 2017
    November 2017
    June 2017
    May 2017
    March 2017
    February 2017
    January 2017
    November 2016
    June 2016
    March 2016
    January 2016
    December 2015
    November 2015
    October 2015
    September 2015
    July 2015
    April 2015
    January 2015
    December 2014
    October 2014
    August 2014
    July 2014
    June 2014
    May 2014
    April 2014
    March 2014
    February 2014
    January 2014
    December 2013
    November 2013
    October 2013
    September 2013
    August 2013
    July 2013
    June 2013
    May 2013
    April 2013
    February 2013
    January 2013
    December 2012
    October 2012
    September 2012

    Picture
    A free PDF is also available in My Work. 
Powered by Create your own unique website with customizable templates.