Orban extends price curbs as inflation soars ahead of election

Orban extends price curbs as inflation soars ahead of election

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Economy2 hours ago (Jan 12, 2022 01:06PM ET)

Orban extends price curbs as inflation soars ahead of election
© Reuters. FILE PHOTO: Hungarian Prime Minister Viktor Orban speaks as he arrives for an EU summit in Brussels, Belgium December 10, 2020. John Thys/Pool via REUTERS

BUDAPEST (Reuters) – Hungary’s government will cut the price of six basic foods from February, Prime Minister Viktor Orban said on Wednesday amid an inflationary surge, extending price caps already in place for energy, fuel and mortgages ahead of an April national election.

Orban, who faces a tough fight for re-election on April 3, said the prices of flour, sugar, sunflower oil, milk, pork leg and chicken breast must be cut back to mid-October levels from next month.

“Prices are rising across Europe due to an increase in energy prices,” Orban said in a video after a government meeting. He said the price cuts must be applied nationwide.

For the first time since taking power in a 2010 landslide, Orban, 58, and his nationalist ruling Fidesz party will face a united front of opposition parties at the ballot.

The opposition alliance includes the Democratic Coalition, the Socialists, liberals and the formerly far-right, and now centre-right, Jobbik. The alliance is led by small-town mayor Peter Marki-Zay, an energetic political outsider.

Fidesz had a five-point lead over the united opposition in a December survey by pollster Median published late last month.

However, Hungarian inflation soared to a 14-year-high of 7.4% in November, above expectations. Economists polled by Reuters see December inflation coming in at a still-hefty 7.2%.

Marki-Zay said Orban’s announcement represented what he called an admission that the economy was in a “tragic state”.

“An atrocious government that starts tackling prices in the last 12 weeks of its 12-year-long rule with a two-thirds (parliamentary) majority must go,” he said in a Facebook (NASDAQ:) post.

In November, Orban announced a three-month cap on fuel prices that could be extended after a review in February.

Orban has also imposed a cap on retail mortgage interest rates until the end of June to shield borrowers from rising loan repayments after surging inflation forced the central bank to hike interest rates much higher than previously expected.

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