Three Quarters of Firms Plan to Raise Prices

Nearly three quarters of firms with 20 or more employees expect to raise prices in the near future. More than a third of the companies planning to raise prices expect a 6-10% increase, slightly more than a quarter of them expect an 11-15% increase, and a fifth of them expect a 1-5% increase.

Presenting the results of its January survey to MTI on Tuesday, the Hungarian Chamber of Commerce and Industry’s (MKIK) Institute of Economic and Business Research (GVI) said that  12% of companies plan to raise prices by 16-20%, while 5% plan to raise prices by more than 20%.

Smaller firms, those providing business services, non-exporters and purely domestically owned firms are considering higher price increases, while larger firms, traders, partly exporting and foreign-owned firms are considering lower price increases, the report added.

Of the firms planning price increases, 93% will raise prices as early as the first quarter of 2023. Larger firms and manufacturing and business services companies plan to implement their price increases earlier, while smaller firms and construction companies are delaying their price increases, it pointed out.

The majority of businesses said that price increases are very or entirely driven by increases in energy costs (70%), labor costs (69%) and raw materials and material costs (69%).

As for the bottom line, almost four-tenths of respondents (38%) expect profitability to remain unchanged this year compared to last year, while 27% of managers expect profitability to increase. A tenth of business leaders expect no profit this year. A further quarter expect a significant (6%) or small (19%) fall in profits compared to last year.

15% of construction firms and 14% of manufacturing firms expect no profits at all. 43% of trading firms expect profits to fall, while the share of companies in business services expecting profits to rise is 39%, a high proportion compared to other sectors, according to the latest survey by the MKIK GVI.