Home Cartoon budget Hungary extends food and fuel price caps until October amid runaway inflation | world news

Hungary extends food and fuel price caps until October amid runaway inflation | world news

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BUDAPEST (Reuters) – The Hungarian government has extended a price cap on some basic foods and fuels until October 1, while a cap on retail mortgage interest rates will remain in place until October 1. end of the year, Prime Minister Viktor Orban said on his Facebook. Thursday page.

Inflation across Eastern Europe has risen since Russia’s invasion of neighboring Ukraine amplified already strong price pressures in the wake of the coronavirus pandemic, forcing central banks to the region to sharp increases in interest rates.

Orban’s price caps have been a mainstay of his nationalist government’s efforts to protect households from rising costs of living, but even with those measures inflation hit double-digit territory last month.

The short announcement on Orban’s Facebook page contained no further details, likely indicating that the measures would be extended in their current form.

The National Bank of Hungary, already in its third fastest rate hike cycle since the collapse of communism, was forced to raise its one-week deposit rate further on Thursday to support the forint, which fell to a low record against the euro this week.

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So far, there is little evidence that the bank’s rate hikes have significantly curbed inflation, which could top the BNH’s full-year forecast of 9.8% released in March. Deputy Governor Barnabas Virag told reporters earlier today.

Orban’s government set a limit of 480 forints ($1.25) per liter on fuel prices in mid-November and followed with caps on some staple foods in February. The measures reduced headline inflation by 5 to 6 percentage points, Orban said.

The scope of the fuel price cap was recently restricted to cars registered in Hungary, sparking a dispute with the European Union, while Hungarian energy group MOL called for the measure to be phased out.

Extending a cap on mortgage rates to protect borrowers from the higher cost of borrowing will be an additional blow to Hungarian banks, already hit with a large windfall tax under Orban’s measures to reduce the budget deficit.

At 12:01 GMT, MOL shares were trading down 2.3% at 2,832 forints on the Budapest Stock Exchange, underperforming the blue chip index, which fell 1%. Shares of Hungarian bank OTP fell 0.4%. ($1 = 383.3 forints)

(Reporting by Anita Komuves and Gergely Szakacs; Editing by Alex Richardson)

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