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 . . .
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 . . .
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