Monday, May 29, 2023

Formal market inflation rises in Cuba in April

The National Office of Statistics and Information reported on Friday that year-on-year inflation in Cuba’s formal market stood at 45.36% in April, compared with 23.69% in the same month of 2022.

The agency does not include the development of prices in the island’s largest and best-stocked informal market, which is more vulnerable to inflation due to the acute shortage of basic products suffered by the island and the lack of regulation.

For its part, the Consumer Price Index (CPI) increased by 2.78% in April compared to the previous month, the ONEI noted.

Category-wise, food and non-alcoholic beverages (70.67%) showed an inter-annual growth, followed by restaurants and hotels (64.91%), miscellaneous goods and services (21.79%), furniture and household articles (21.19%), education (19.50%) and transport (19.15%).

In April alone, the prices of restaurants and hotels increased by 4.01%, followed by the prices of food and non-alcoholic beverages by 3.70%.

All categories have experienced year-over-year price increases, many of them at double-digit rates. The lowest inflation was in health (2.41%), communications (0.34%) and alcoholic beverages and tobacco (1.82%), sectors controlled by state monopolies.

This strong price increase comes after Vani registered 77.33% and 39.07% inflation in the Cuban formal market in 2022, respectively, in 2021.

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There is no data on the growth of Cuba’s informal market, where some basic product prices have doubled in the past 12 months. A carton of 30 eggs in Havana has gone from 600 Cuban pesos (CUP) ($25/23 Euro at today’s exchange rate) to 2,000 CUP ($83.35/77.12 Euro), when the average wage in 2022 was 4,200 CUP ($175.18) /16,209 Euro)

Some independent estimates put informal market inflation at around 500% in 2021.

As Cuba imports 80% of its consumption, the depreciation of the Cuban peso (CUP) is relevant in an inflationary spiral, according to UN estimates. In the past twelve months, the Cuban currency has gone from 113 CUP per dollar to 193 in the informal market, according to exchange rates compiled by unofficial media.

Cuba has been going through a severe economic crisis for two years, evidenced by shortages of basic products (such as food, medicine and fuel), partial dollarization of the economy, deep depreciation of the peso, prolonged and frequent blackouts. And a strong price hike.

The effects of the pandemic, increased US sanctions, and errors in national macroeconomic policy are the main causes of this crisis, fueling migration—mainly to the US—and social discontent.

Nation World News Desk
Nation World News Desk
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