Soaring utility bills are a huge headache for Hungarian small businesses

By Geza Molnar

Budapest, Hungary—Soaring utility bills, mainly electricity and gas, are making it even more difficult for small businesses to make ends meet in Hungary.

Margit Kiss, 42, mother of two and owner of the Kiss Bakery in Urom, a suburb of Budapest, is very frustrated to say the least.

Even though she only uses gas to heat water, Kiss’ latest gas bill has gone from 3,000 forints to 19,000 forints (US$45.6) a month, and her electricity bill has gone up. than doubled, from 45,000 forints to 108,000 forints.

Margit Kiss, owner of Kiss bakery, works at her shop in Urom, a suburb of Budapest, Hungary, Oct. 19, 2022. Xinhua

“I had to turn off the gas completely, fearing a price I wouldn’t be able to afford,” she said. She has installed an electric heating panel in her apartment and uses the heat generated by refrigerators to heat her bakery.

While talking to Xinhua, she received a delivery of “Gerbeaud” cakes at a price 20% higher than the previous week.

“Five hundred forints for a slice of Gerbeaud?” … It was 400 last week, and you didn’t even put real nuts in it, just sugar and chestnuts,” she yelled at her supplier over the phone. “How am I supposed to sell this? »

She explained that in light of such a price hike, she would no longer order Gerbeaud cakes as she could not sell them without a loss.

Gerbeaud cakes are among the best-known desserts in Hungary. This is a delicious layered yeast cake with an apricot and nut filling covered in a thin chocolate glaze. Traditionally, it is a holiday dessert made at Christmas or Easter. They are becoming more and more expensive as food and energy prices continue to rise.

The conflict between Russia and Ukraine has sent commodity prices skyrocketing. Flour and bread prices have soared due to supply chain disruptions, and cuts in Russian gas supplies have had the same effect on energy prices.

In August, the government removed the cap on energy prices, meaning businesses and institutions now have to pay market prices. Households consuming above the national average are also affected. For them, electricity prices have doubled and the price of gas has increased sevenfold.

And that’s not much, because she only operates the refrigerators for dairy products. Those for soft drinks are now unplugged and used only as shelves, meaning customers can no longer enjoy frozen drinks.

The prices of its products have also increased considerably: an average loaf of bread now costs 700 forints, compared to 500 forints in summer and around 350 forints in February.

Bread prices in September in Hungary rose 76.9% from a year ago, making the highest increase in the European Union, said Eurostat, the EU’s statistical office.

According to the Organization for Economic Co-operation and Development, food price inflation in Hungary in August was 33.1% year-on-year, the second highest behind Turkey.

A carton of 10 eggs, which used to cost 500 forints, now sells for 1,000 forints, and in just eight months the price of 100 grams of unsalted butter has risen from 450 forints to 850 forints.

Its customers are flabbergasted by the price tags. “I’d rather not repeat their comments… the prices are going up every week,” she complained.

Hungary’s inflation rate in September was 20.1% year-on-year, according to the latest official figures, and analysts forecast a peak of 24-25% later this year before gradually falling back to double digits in 2023.Xinhua

According to the latest poll conducted by local publication Portfolio in late September, 14% of small and medium-sized businesses nationwide are counting on their business shutting down.

Soaring energy prices have yet to cause problems for Kiss’ son Bence, 5, in kindergarten, as temperatures outside are still mild in Hungary.

But she worries about winter because under a new government decree, the temperature in educational institutions across the country cannot exceed 20 degrees Celsius (18 degrees Celsius in public administration buildings). .

Laura T. Thrasher