The Hungarian government has given fuel traders two weeks to adjust their prices to the Central European average, Economy Minister Marton Nagy said on Wednesday, Reuters quoted.
Viktor Orban’s cabinet scrapped capping fuel prices in December 2022 – after a lack of imports and panic buying led to fuel shortages – but vowed to intervene again if fuel prices rise above the regional average.
On Tuesday, the national bank said fuel price spreads widened after the cap was removed, exceeding not only previous levels but also average levels elsewhere in central Europe.
“In two weeks, the government will return to this issue, analyze the evolution of prices and intervene with tough measures if fuel retailers do not return to the regional average,” said Marton Nagy.
On Tuesday, the central bank’s deputy governor, Barnabas Virag, said that, in his view, any intervention that “moves the market towards a sustainable and sustainable decline in these margins, putting fuel prices on a sustainable and sustainable downward trajectory” is justified.
Cheaper fuels could reduce inflation by 20 to 30 basis points
In the first quarter of last year, annual inflation in Hungary was 25%, the highest in the European Union. In March last year, it stood at 3.6%, but economists see a return to 5.4% by the end of 2024 as base effects fade and services inflation remains high.
Economist Georgi Deyanov of Morgan Stanley said Hungary’s plan to align fuel prices with the regional average could reduce inflation by 20 to 30 basis points, increasing the chances of keeping it within the central bank’s tolerance band.
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