Major Retailer Sees No Food Shortage But High Prices in Hungary
- 5 Jul 2022 10:25 AM
- Hungary Around the Clock
There is no need to worry that there will be a serious shortage of anything, but the price of some products will rise dramatically, which is simply a fact, Gabriella Heiszler CEO of retail chain Spar Magyarország told personal finance website Pénzcentrum on Monday.
She confirmed that the government did not negotiate with Spar about the new special tax on retailers.
A food retailer, if it works well, generates approximately a 2% profit margin, she said.
Compared to this, Spar will be taxed at 4.1% of the portion of its tax base exceeding Ft 100 billion from January 1, 2023.
Moreover, it also has to pay an additional tax equal to 80% of the retail tax for 2021, an amount of Ft 10.5 billion, by November 30.
This means that the levy is not a tax on “surplus profits”, but a special tax on turnover, Heiszler added.
Due to high inflation, consumers have started to “buy down” – i.e., replacing expensive brand products with cheaper own-brand ones, which also means a lower profit margin for Spar.
The price cap on certain foods cost Spar Ft 1.1 billion from the day it was introduced on February 1, to May 1.
The biggest loss was suffered on chicken breast sales, while the biggest-selling price-capped product is sugar.
Heiszler said wage competition in the sector will not cease in the future.
Spar invested €91-92 million in fixed capital last year, but it will spend a little less this year because it is cutting back on spending due to the special tax.
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