Profit Margin Cap Takes Effect: Shops Sell Groceries at Lower Prices From Today

Starting today, the profit margin cap is in effect in stores: for thirty staple food products, the retailer's profit margin cannot exceed ten percent. With this measure, the government aims to put an end to excessive and unjustified price increases.

Illustration (Photo: Zoltan Havran)

These are the affected food items

The thirty essential food products subject to the ten percent profit margin cap include various poultry and pork products, dairy products, oil, flour, margarine, sugar, and eggs. The full list can be found here.

The most noticeable price reductions will likely be in dairy products and meat, as retailers had the highest profit margins on these categories. In January, the average margin on pork chop was nearly 55 percent, while for chicken wings, it was over 42 percent. Data from January also show that stores were selling sour cream for more than twice its purchase price, and the same was true for butter and fruit yogurts.

 

The ministry provide assistance

The national economy ministry is providing guidance to retailers to help them comply with the regulations. Through its professional oversight body, the National Trade and Consumer Protection Authority, the ministry is offering all necessary support to ensure that retail stores clearly understand their obligations. To facilitate compliance, the ministry is publishing a professional guide to assist all affected parties, including businesses and government offices responsible for enforcement.

It is important to note that the ministry took small retailers into account when drafting the legislation. As a result, the regulation only applies to retailers with a net sales revenue exceeding one billion forints in 2023.

The ministry expects that the measure will lead to an average price drop of more than ten percent across the affected thirty product categories.

National Economy Minister Marton Nagy stated in a background discussion that the price-lowering effects of the measure will already be reflected in the April consumer price statistics. The Central Statistical Office’s May data release will provide a clearer picture of the results. Initially, the measure will remain in force until the end of May, after which the government will review its impact and decide on any necessary further steps.