(Bloomberg) -- Hungary capped motor fuel prices for three months as Prime Minister Viktor Orban sought to address concerns about surging energy prices just five months before the most closely-fought general election in more than a decade.
Fuel prices will be capped at 480 forint per liter ($1.5) from Nov. 15, Cabinet Minister Gergely Gulyas announced in a Thursday briefing. Average prices for the most-consumed type of gasoline shot to a record 507 forint, according to price comparison website holtankoljak.hu, while the average cost of diesel climbed to 513 forint per liter.
Governments across the globe are under pressure to help consumers weather soaring energy prices. In Hungary, fuel prices jumped 31% in October compared with a year earlier, helping push inflation to a nine-year high. The price cap is the latest of Orban's measures to boost consumer sentiment before elections, complementing an almost 20% increase in the minimum wage from next year and a $1.9 billion tax rebate.
Read more: Orban Pulls $7.5 Billion Spending U-Turn to Swing Close Election
Shares of Mol Nyrt., Hungary's largest refiner, plunged 6.4%, the most since April 2020, after the cabinet said that the cost of the price cap would be born by distributors. Mol, which raised management's earnings guidance last week after surging oil prices boosted profit, declined to comment on the government's move.
“The size of the negative impact [on Mol] depends on how long the government keeps the price cap,” said Gellert Gaal, an analyst at Budapest-based brokerage Concorde. “We wouldn't be surprised if it was extended by two more months until general elections next Spring.”
Croatia capped fuel prices in October for a month and extended the temporary move for another 30 days in a Wednesday announcement. In Croatia, both the government and distributors cover the cost of the cap.
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