Tag: Cuban inflation

Accelerating Inflation in Cuba 

Cuba’s official inflation reached 33.17% in March with fuel and food prices increasing the cost of living for the people. According to Cuban economist Pedro Monreal, “without an increase in food supply, it is difficult to assume that inflation in Cuba would be substantially reduced.” [1]

Another Cuban economist, Omar Everleny Pérez, on the basis of maximum prices from the state National Office of Statistics and Information (ONEI), estimated that the current cost of the minimum basic food basket for two people in Cuba is almost 20,000 pesos a month, which is much higher than the national minimum wage of 2,100 pesos.

Another major factor in Cuban inflation is the falling value of the Cuban peso in international markets. For example, on April 10, U.S. economist Steve Hanke, an academic at Johns Hopkins University, said that since January 23, the Cuban peso has depreciated 49% against the dollar.[2]

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[1] Inflation accelerates in Cuba: fuel and food dominate the rise in prices, Diario de Cuba (April 20, 2024);

[2] Euro and dollar, unstoppable, and the salary of Cubans increasingly meagre, Diario de Cuba (April 21, 2024)

 

How Cuban Government Fuels Inflation

Rafaela Cruz, a Cuban analyst for Diario de Cuba, asserts, “Ending inflation is not a priority for the Cuban regime.” Instead, “the Government exacerbates inflation as another [means] to maintain power and profit” by the following means:

1. “They raise taxes when economic activity is almost non-existent.”

2. “Subsidies (direct distributions) decrease when food is more expensive and scarce.”

3. Tax incentives for the creation of MSMEs are withdrawn even though their number is [very] low.”

4. “Castling is the monopoly of foreign trade, causing bottlenecks that make imports more expensive.”

5. “Salaries of some workers rise at the expense of [reducing] those of the rest.”

6. “Increase public spending by printing large amounts of money.”

7. “Prices of basic goods and services … rise.”

8. “The peso remains overvalued, which encourages imports.”

9. “Little, and poorly invested, in sectors far from domestic inspection.”

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Cruz,  nine reasons that show that the Cuban Government fuels inflation, Diario de Cuba (Feb. 28, 2024.