What can East Europeans afford for Christmas?
2022.12.07 08:11
What can East Europeans afford for Christmas?
Budrigannews.com – Because food prices in Eastern Europe are rising faster than in the rest of the European Union, consumers are saving up to buy their favorite carp and pork dishes for Christmas.
According to Eurostat data, food prices increased by a staggering 45.2% in Hungary in October compared to the same month a year earlier. Food prices increased by more than 20% in 10 countries in the east of the EU. In October 2021, food costs were 33.3 percent higher in Lithuania and 30 percent higher in Latvia.
Even though there are indications that headline inflation may have reached its peak in some nations, food prices are still rising rapidly, adding to the pressure on the cost of living and requiring central banks to maintain high interest rates even as economies begin to rapidly slow.
According to experts, a global trend fueled by rising energy and fertilizer costs is being exacerbated by local factors like low food industry productivity in some former communist nations, a heavy reliance on imports, and rising wages in tight labor markets.
Animal feed prices have skyrocketed in Hungary as a result of this year’s severe drought, which also contributed to an increase in import costs and a weaker forint.
Lajos Kander’s family raises more than 2,000 hairy “mangalica” pigs on their farm in Tiszaeszlar, eastern Hungary. These pigs are a traditional breed that are prized for their meat.
The Kanders typically cultivate wheat and maize for their own feedstock. However, the drought has forced them to purchase feed from the market, where, according to Lajos Kander, prices for autumn wheat and maize have nearly doubled since 2021.
He stated, “In 2023 we will face serious difficulties as we will have to buy feed; we’ll see at what price we can make up for the missing amount,” noting that power, wages, and veterinary expenses had also increased.
Under a contract that ends on December 31, the farm pays 29 forints per KWh for power. After that, the bill will rise to 138 forints per KWh. They are fortunate to have solar panels. In the meantime, the annual cost of immunizing their pigs has tripled to 4.5 million forints.
The Kanders have increased prices by about 20-25%, but Lajos Kander stated that it would be difficult to pass on additional costs: To make it through this situation, businesses will have to bear some of these costs. We might want 2,000 forints for a kilogram of pork, but nobody will buy it.
Food is now the primary driver of inflation in Hungary, which is expected to accelerate to 22.2% in November, according to data on Thursday. The removal of a cap on fuel prices is expected to give inflation a further boost in the future.
While food and non-alcoholic beverages inflation in Poland was 22.3% in November, which was significantly higher than the overall CPI of 17.4%, headline inflation in the Czech Republic slowed to 15.1% in October.
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Public Bank of Hungary Lead representative Gyorgy Matolcsy said on Monday that expansion would average 15-18% one year from now, with food representing over half of additional ascents.
He stated, “The food industry in Hungary operates with an unacceptably low productivity, monopolies, a high share of imports, and a higher energy input.”
Gediminas Simkus, who is in charge of the central bank in Lithuania, one of the Baltic states whose small, open economies are affected by changes in commodity markets around the world, offered a more upbeat outlook.
He stated last week, “Next time, we will see that the monthly inflation will go down a little bit, because the peaks in the prices of food and energy raw materials have already happened and hopefully they will not happen again.”
Consumption has begun to decrease as a result of rising costs.
In Hungary, food sales decreased by 5.6% in October as families made savings in response to annual increases of over 34% for meat, fish, and bread and 80% for bread. Sugar prices increased by 105 percent for consumers in the Czech Republic, while flour prices increased by 45.4% in Poland.
Eva Racz, 75, stated in a Budapest market that she could not afford the traditional carp feast this year.
She went on to say, “This will be a poorer Christmas, as our pensions are small and we need to pay for utilities and our medicine,” adding that she and her husband live on pensions that total 200,000 forints ($507.74) per month.
Racz stated, “Over Christmas, we will have some broth, stuffed cabbage, roast meat, and potatoes.” I’m feeling frantic that this proceeds, and for how long?”
Poles will spend an average of 1,259 zlotys ($281) on Christmas this year, 307 zlotys more than a year ago, according to a Barometr Providenta survey, even though almost half of those polled said they would buy cheaper items to save money.
In the first half of next year, it is anticipated that inflation in Hungary will begin a very slow decline.
Goldman Sachs (NYSE:) stated, “There are still no durable signs that the inflation dynamics are improving in Hungary.” has stated
