Average EU income buys one and a half times as much fuel as average Hungarian income, analysis finds

According to data from April of this year, the average EU wage allows for purchasing one and a half times as much fuel as the average Hungarian income, a recent analysis by GKI Gazdaságkutató Zrt has found, as reported by MTI.

While in 2010, a monthly net average Hungarian wage could buy about 450 liters of fuel, this year, prior to the conflict with Iran, that figure had already reached 900 liters, and it has only slightly decreased since then as a result of the introduction of price caps.

In other words, rather than widening, the gap has actually been narrowing over the past decade and a half, given that in 2010, a monthly average salary in the European Union could buy nearly three times as much fuel as monthly average earnings in Hungary. Before the Iran conflict, average monthly earnings in the EU were enough to buy 1,670 liters of fuel; which dropped to less than 1,350 liters due to the crisis, but the EU average is still about 460 liters higher than that in the V4 countries.

According to GKI’s summary, trends in fuel affordability illustrate well that price and wage levels are not the only factors determining the actual burden on the population, but decisions about economic policy also have a decisive influence.

In Hungary, the government's active interventions in recent years (such as the current price cap) have been able to mitigate the impact of market shocks on the population and improve affordability in the short term. However, this is only one side of the coin.

At the same time, these tools, particularly price regulation, can cause distortions in the longer term and raise sustainability concerns,

GKI notes.

This is a very subtle way of describing the distorted situation caused by the price caps introduced by the Orbán government in Hungary. In any case, in the more fortunate countries of the EU, the rise in fuel prices is felt less even in a regular market environment, the economic researcher concluded in its analysis.

In the V3 countries (the V4 group without Hungary), it is typically possible to purchase 100–150 liters more fuel during peacetime, which is a result of higher average incomes combined with fuel prices similar to those in Hungary. In times of crisis, such as the the current one due to the closure of the Hormuz strait, however, this advantage disappears, and affordability falls to a level close to that in Hungary.