Price Rises May Also Be at the Expense of Food Quality

A significant rise in food prices in Hungary could shift demand towards lower quality products. The supply of quality meat products may fall and lower quality products may appear in shops, Hungarian meat industry players say.

Average inflation in Hungary was 23.1% year-on-year in November, according to Eurostat's Harmonized Index of Consumer Prices (HICP). Food prices rose by 49.2% for the whole product group. Hungary has jumped to the first place in the EU in terms of annual overall price increases, ahead of the Baltic countries, which previously topped the list.

The significant price increase is expected to lead to a fall in demand and a return of lower quality products in the shops of domestic meat producers. The CEO of the Bonafarm Group, Attila Csányi also expects demand for lower quality food to increase and President of the Hungarian Meat Industry Association (Hússzövetség), Tamás Éder also made similar comments.

Consumers are very sensitive to prices, so there are already indications that more people are turning to cheaper products than before, as processors are also experiencing a drop in sales, the president of the Meat Association said.

Tamás Éder added that processors' costs have risen so much since the beginning of the year that they are often not covered by the price of products. Therefore, further price increases are expected in the meat products market in the coming months.

He also informed that live pig prices have increased by 70-80% since February. Added to this is the increased cost of energy and labor. Some companies are having to pay nine to ten times higher gas and electricity bills than last year. Against this background, he does not consider the 30-40% increase in the price of meat products to be excessive.

He said that the domestic meat industry has undergone a qualitative renewal in the last ten years. However, current inflation is jeopardizing the progress made in this area.

“Consumers have so far been willing to spend on more expensive, higher quality products, which has led to a much-improved supply of domestic meat products. But this trend has now been broken," the President pointed out.