Prime Minister Viktor Orban of Hungary pioneered many of the themes dear to conservatives in the United States, railing for years against “migration insanity,” “the woke virus” and “gender madness.”
Now Mr. Orban is engaged in an effort that veers away from the orthodox conservative view that the state should stay out of the economy. He’s trying to set the price of eggs and other goods.
Unable to curb Hungary’s inflation rate, the highest in the European Union, and facing a surge of support for a political rival, Mr. Orban last week ordered price controls on 30 basic foodstuffs. And he accused supermarkets of price gouging, particularly on eggs and butter.
Mr. Orban said the Hungarian government would starting this week force supermarkets to bring down their prices by ensuring that what they charge for essential foods does not exceed a 10 percent markup on what they cost wholesale. The current markup for eggs, he said, was an “unacceptable” 40 percent.
“Prices don’t rise, they are raised,” Mr. Orban thundered, blaming inflation on grocery stores, the biggest of which in Hungary are foreign companies like Britain’s Tesco and Austria’s Spar.
Hungary has been hailed by many American conservatives (and President Trump) as a beacon for how a country should be run. But the move by Mr. Orban underlines how he has struggled to manage the thing many Hungarians care about most: their country’s ailing economy.
Economic troubles have weakened Mr. Orban at home and abroad. The Hungarian Economic Research Institute, an independent body, reported recently that its business confidence index had “slipped to a 50-month low.”
Those troubles have badly dented Mr. Orban’s popularity ahead of an election next year that, according to some opinion polls, his governing Fidesz party could lose to an upstart opposition movement led by Peter Magyar, a former party loyalist.
Mr. Magyar has rocketed to national fame as the leader of a mass movement built on denunciations of Mr. Orban over Hungary’s “staggering cost-of-living crisis,” its faltering public services and an economic playing field tilted in favor of businesses controlled by the prime minister’s relatives and political allies.
In Budapest on Saturday, Mr. Magyar drew tens of thousands of anti-government protesters to a rally commemorating Hungary’s failed 1848 revolution, far more than attended a similar event held earlier in the day by Mr. Orban.
Mr. Magyar mocked Marton Nagy, the economy minister, for trying to dictate the price of sour cream, a Hungarian staple, by “circling numbers with a ballpoint pen to see how much the price can be cut” while Mr. Orban, his family and friends “become rich stealing your money.” The crowd roared.
Erika Lapos, a retiree who traveled more than 100 miles with her husband from their home in northeastern Hungary to attend Mr. Magyar’s rally, blamed corruption for the weak economy. “Is not just a scandal, it is a crime,” she said.
Mr. Orban had until recently largely succeeded in deflecting criticism of his economic record and corruption by blaming high prices on the war in Ukraine. He also sought to focus public attention on issues like illegal immigration and his false accusations that the European Union was trying to turn Hungarian children transgender or gay.
But the Ukraine war and migration no longer dominate voters’ concerns, said Agoston Mraz, director of the Nezopont Institute, which conducts polls for Mr. Orban’s government.
“The inflation issue is now the most important by far,” he said.
Still, eager to change the topic and rev up Mr. Orban’s conservative base, his supporters in Parliament on Tuesday amended a law on public assembly to ban gay pride parades, the latest in a series of efforts to target the country’s L.G.B.T.Q. community.
But there’s no escaping the economic realities.
Overall, Hungarian food prices in February, according to official figures released last week, were 7.1 percent higher than a year earlier, meaning that food is now more than 80 percent dearer than five years ago, according to calculations by ING Bank.
Mr. Mraz said that, according to his institute’s polling, Fidesz still had a solid lead over Mr. Magyar’s Tisza party but was vulnerable on the economy.
Economic woes have also weakened Hungary’s hand in its long struggle with the European Union over sanctions on Russia — Mr. Orban wants them removed — and a host of other issues relating to the rule of law, democracy and corruption.
Short of cash to fill a big hole in its budget, Hungary has no real chance of getting financial aid from Mr. Trump, despite their close political ties, and increasingly needs money from the European Union, which has frozen more than $20 billion earmarked for it years ago.
In a blunt warning to Mr. Orban, who has infuriated European leaders by constantly vilifying them, the European Union’s executive arm on Dec. 31 took about 1 billion euros, or about $1.1 billion, of Hungary’s frozen money off the table, saying a time limit had expired.
On Friday, after weeks of attacks on the bloc by Mr. Orban as an “empire” of “warmongers” before which his country would never bow, Hungary quietly sheathed its veto power and agreed to allow the renewal of European sanctions imposed on more than 2,400 mostly Russian individuals and entities.
Mr. Orban’s jeremiads against Brussels, said Zoltan Pogatsa, an economics professor at the University of West Hungary, play well with his nationalist political base but “don’t help pay the bills.”
Before the European Union froze the bulk of its funding, he added, “money from Brussels drove most of the growth during what Mr. Orban calls the golden years,” a period of high growth and relatively stable prices during his first decade in power before the Covid pandemic.
After slipping into recession last year, Hungary’s economy is growing again, albeit at a very slow pace. But investment, a key driver of future growth, has plummeted, Mr. Pogatsa said. And the hole in the budget — a gap criticized by the European Union last month as an “excessive deficit situation” — is likely to balloon if, as he did before the last election in 2022, Mr. Orban offers handouts to voters before the one next year.
Mr. Orban last month announced what he described as the “biggest tax reduction program in Europe,” promising to exempt mothers with two or more children from income tax and give pensioners a rebate on the value-added tax they pay on foodstuffs.
At 27 percent, Hungary has the highest such tax in the European Union, and many economists say the easiest way to reduce food prices would be to reduce it, and also a special 4.5 percent tax on retailers.
But doing that would increase the budget deficit at a time when neither the European Union nor the United States is offering cash.
The ratings agency Standard & Poor said in November that it had downgraded its outlook for Hungary to negative, largely because it “may ultimately lose out on a substantial amount of the envisaged European Union funds.”
“No matter how much anti-E.U. rhetoric he uses, Orban realizes that he still has to squeeze some juice out of Brussels,” said Lajos Bokros, a former finance minister.
He said Mr. Orban viewed inflation and other problems entirely through a political lens. “His government created inflation with its loose spending,” he said, “but lies to voters that it was imported from outside” — by supermarket chains, most of which are foreign-owned, and by higher energy prices because of the war in Ukraine.
Sensing political danger ahead, Mr. Orban responded swiftly to the release of official data showing that Hungary’s year-on-year inflation rate had risen in February to 5.6 percent.
“We will put an end to excessive and unjustified price increases,” he said. He did not specify how this would be done, but Hungary’s state statistics office on Wednesday said that Mr. Orban’s intervention had already lowered egg prices by nearly 20 percent.
Geza Sebestyen, the head of the Center for Economic Policy at Mathias Corvinus Collegium, a conservative government-affiliated university, said Mr. Orban was unlikely to send inspectors to punish shopkeepers who hadn’t lowered prices. “Socialism obviously doesn’t work,” he said, “and Eastern Europe knows that better than anyone.”
But Peter Bod, a former governor of Hungary’s central bank, fears Mr. Orban is reaching for communist-era tools in what is supposed to be a free market.
“Instead of goulash communism,” he said, referring to the country’s idiosyncratic reworking of Soviet-imposed socialism in the 1960s and ’70s, “we got goulash capitalism.”
Barnabas Heincz contributed reporting.
