Hungary To Place Price Ceiling on Groceries

Hungarian Prime Minister Viktor OrbánThis week, a plan was announced to put price controls on common groceries items in anticipation of the next national election and to combat rising inflation.

Beginning February 1, prices for milk, sugar and flour will return to October 15, 2015. Since October, Hungary has seen record levels of inflation in all sectors.

Gergely Gulyás, the head of the prime minister’s office, announced that the measures are currently slated to last for three months. But, this timetable can be extended if necessary. Orbán so chooses.

The question of who would be benefited by this policy is open to debate.

Hungarian News outlet provides an economic analysis PortfolioLarge discount and multinational chains, which have already been selling at low prices, are less likely to be affected by the price control mandate. Analysis suggests that smaller grocery stores owned by family members tend to sell at significantly higher prices, and are therefore more susceptible to being adversely affected if price caps are implemented.

As Michael Munger (Duke University Political Scientist) explains, that’s normal. WriteFor December The Wall Street JournalAbout American progressives pleading for federal price control to fight inflation. Munger pointed out that all economists on the spectrum agreed that plans by government to control prices haven’t succeeded. A federal board that was created to regulate price increases in the 1970s saw huge profits for corporations as well as the destruction of middle-class jobs and choices.

The slide in inflation will continue if Hungary continues its downward spiral. Price controls are not going to stop it. The 2003 year was a record-breaking year. Venezuela placed strict price controlsWith the goal of helping families more easily provide food for their family, we have focused on staple foods. The abrupt stoppage of deliveries by wholesalers and suppliers led to a severe food shortage. The country became a slum. New price controls added2020. Between those periods, inflation in the country soared and price controls did not increase access to staple products.

In 2013, India expanded Prices controlled652 of the most important drugs. Similar to Venezuela, India’s government wanted to assist the poor who struggle to pay for drugs. These price controls led to the Unintended consequencesBecause of the reduced profit margins, many pharmaceutical manufacturers have switched to less-important drugs or stopped altogether.

Ludwig von Mises was an Austrian-born, free market economist. He saw price controls in a bad economic policy. It leads to corruption and shortages.

People who are first in line can buy. Others cannot. This is evident in the scene of children and housewives standing in line in front of the grocery store. It’s a familiar sight to anyone who has been to Europe during this age of price control,” Mises said in Omnipotent Government (1944). But price caps not only do not reduce the supply of goods, but also fail to raise it. So they don’t achieve what the authorities want.