Gergely Gulyás, the head of the Prime Minister's Office, told a weekly press briefing on Thursday that a government decision to cap supermarkets' profit margins at 10 percent will result in "visible and tangible" price reductions.
Gulyás said the regulation would come into force on Monday. With the war in Ukraine approaching an end, unjustified price rises must be brought to an end, he added.
Intervention in commerce is a "measure of last resort" for the cabinet, he said, but warned that if the profit margin cap was insufficient, there was "more radical" regulation that had precedents in the European Union. The government "has no qualms" about applying measures such as those in Croatia, he added.
He said the profit margin regulations would ban profit margins larger than 10 percent at retailers with revenues larger than 1 billion forints (EUR 2.5m), and prohibit price increases at products with a lower profit margin, he said.
The profit margin cap is expected to reduce the prices of eggs, sour cream, flour and milk, as well as other products, Gulyás said.
He added that checks for compliance with the new rule would start days after it comes into force.
If supermarkets raise the prices of other products to compensate for the lower margins, the government will intervene, he said.
The profit margin cap will be in force until May 31.