Food inflation in Hungary has risen to a two-decade-high, despite the government's continued extension of the price cap on essential basic food items. Energy prices have also soared, making it hard for people to heat their homes this winter, and as the year draws to a close, economists warn that the worst is yet to come.

Peter Geltz is feeling and singing the blues this holiday season. The rising cost of living in Hungary has given him little to be cheerful about. His retirement cheque of $200 a month is not enough to cover his expenses, so he makes some extra cash playing his guitar in restaurants and bars around Budapest. But even with the extra money, life is hard.

"To put it plainly, I'm hungry," said Geltz. "I go to the store to buy cheese, and one day it costs $1.30. The next day it costs $2.00, and the day after, it doubles to $4.00. That is what's happening here."

Peter is not alone. Rising food and energy prices in Hungary are making it hard for many to keep food on the table or stay warm this winter.

"I worry. I cannot sleep. I spend many nights thinking of what will happen, when one cubic meter of gas will cost $1.80." Said Terez Toth. "It is terrible. Who can pay for that?"

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Hungary's inflation rate shot up to 22.5 percent year-on-year in November. The Hungarian government says the Ukraine conflict and the EU's sanctions against Russia are to blame for Budapest's economic woes, but some economists disagree, placing the blame on the government itself for the rising cost of living and the devaluation of the Hungarian forint.

"The government failed to reduce the tax burden," said Bod Peter Akos, former President of the National Bank Of Hungary. "Hungary has the highest VAT in Europe, 27 percent on most products; second, this strange playing with the price cap, which increased the uncertainty, and third, the weak HUF."

To counter some effects of inflation, Hungary's government capped food prices on February 1, three weeks before the Ukraine conflict began. The cap has been renewed throughout the year, and recently, the government extended it until April 2023, but even with these measures, the prices in grocery stores keep rising. The government says the cap is necessary because the country is facing an "extraordinary situation," and it insists that if it remains in place, inflation levels will come down to single digits next year.

Food prices in Hungary are currently a staggering 43 percent higher than the previous year. The sharpest increase among EU countries, making it hard for people on fixed incomes to afford the basics. Prime Minister Viktor Orban recently signed a decree to increase pensions by 15 percent starting in the new year. But for some retirees, that will only help them a little.

"My pension is around $200. It was $130 in the last year," said Geltz. "If someone doesn't have a side hustle, that's 'closing time'."

Analysts are concerned that inflation will keep rising in 2023 because the government has not reined in expenditure. Many believe the food price cap and higher taxes on companies will not go far enough to address inflation.

"The budget passed by parliament last summer is totally out of line with reality," said Akos. "Just to give an example, next year's budget is based on an annual inflation of 5.2 percent, not monthly! We have a 20-something percent inflation this year, and who knows next year."

Analysts say that if the government doesn't change its tune next year, people in Hungary will continue to struggle until next Christmas.