Gulyás emphasizes significance of government-imposed price caps

Gergely Gulyás said government measures to control prices had cut inflation by over 5 percent.

Gergely Gulyás, the prime minister’s chief of staff, said that as energy prices rise in the market, so does the significance of the government-imposed price caps. Gulyás said government measures to control prices had cut inflation by over 5 percent. Financial experts agree that without the government-imposed price caps, inflation would be over 13 percent instead of the current rate of 8.5 percent, he said, noting that Prime Minister Viktor Orbán on Wednesday announced the government’s extension of caps on fuel and some staple foods until July 1.

Put to him that 90 percent of 600 small petrol stations in Hungary may be bankrupted because of the current cap on the price of petrol, Gulyás said the government was not considering changing the blanket cap since a more graduated and targeted system would involve too much red tape. Commenting on food-price caps, he said that some of the sectors affected generated big profits, and the interests of Hungarian families currently had priority over profits. The annual cost of the measures, around HUF 50 billion (EUR 130m), introduced in February, mainly affects multinationals. Smaller retailers are far less affected, he added. Making long-term decisions on price and interest caps amid the current instability, he said, would be hard, so the government make sure that the measures and their deadlines are predictable and properly communicated.

Commenting on a pro-Russian protest planned to be held in Budapest, Gulyás said Hungary condemned Russian aggression against Ukraine. At the same time, “in the spirit of classical liberalism”, Hungarian law since 1990 has protected the right of assembly except in cases of extremism, he added. Gulyás called the US and NATO position on avoiding any direct conflict with Russia “a wise one”, and Hungary, he added, shared the same position. “No one wants a third world war.” Meanwhile, Gulyás said Hungary’s health-care system was open to caring for injured Ukrainian soldiers without limit.

Commenting on Hungary being the first country in Europe to approve Gazprom’s request to amend its contract with the company on gas deliveries, he said Hungary had been open and above-board about it, unlike other countries “quietly doing the same”. He said it was “impossible” for the country to replace Russian natural gas from other sources and it would be “difficult and expensive” to wean itself off Russian crude oil. Gas interconnectors with neighboring countries which have undergone major developments since 2010 are all supplied with Russian gas, he added. “We’d be delighted not to have to buy Russian gas if other sources were available at the same price,” he said, adding that alternative sources would be several times more expensive and in insufficient volumes. The government plans to refill gas stores in the coming period, he said, adding that Hungary was currently receiving Russian crude oil and natural gas without interruption, “and we trust this will remain the case”. Like nine other countries, Hungary is paying in euros before conversion to roubles, he added. Whereas contingency plans are in place, Hungary does not expect Gazprom to stop gas supplies to Hungary since the country is fulfilling its payment obligations in full, he said.

Photo credit: MTI