Xiomara Castellanos, a Cuban retiree, was delighted when the government raised salaries and pensions in 2021 as part of a currency reform, but at no time did he think that prices would reach unprecedented levels in the socialist system in which he lived for 62 of his 80 years.
Cuba is today one of the Latin American countries facing a well-known escalation of inflation, a phenomenon that has taken ordinary Cubans by surprise.
President Miguel Díaz-Canel will participate in a conference call on Tuesday with his counterparts from Mexico, Colombia, Brazil and Argentina, which are also affected and whose governments are trying to adopt common strategies to lower consumer prices.
In January 2021, the authorities implemented a monetary reform put an end to the application of the one dollar rate for one Cuban peso which has prevailed for decades in the state sector and which has caused distortions in the national economy.
Prices
This led to a devaluation of the Cuban peso. The currency rose from 24 to 120 pesos per dollar at the official exchange rate. On the black market it’s now 180.
Although within the framework of the reform the salary has increased by an average of 450%, “the prices (…) are skyrocketing, they do not correspond to the salary”, according to Castellanos, who receives a monthly pension of 1,528 Cuban pesos, equal to 13, 8 dollars at the official exchange rate, almost as much as a box of 30 eggs ($14) costs today.
According to official data, inflation has increased 70% in 2021 and 39% in 2022.
For Pavel Vidal, an academic at Colombia’s Pontificia Universidad Javeriana de Cali, official statistics “underestimated actual inflation by 5 to 6 times,” he told AFP by email.
“Real inflation in 2022 exceeded 200%one of the highest on the planet,” estimated the Cuban economist.
Xiomara Castellanos is resigned to buying products from the “provision book”, introduced by the late leader Fidel Castro in 1963 to deal with food shortages and which represented a symbol of food security.
However, it includes fewer and fewer products.
At the almost symbolic price of $1.42With notebook in hand, Xiomara buys what the state allocates to her a month in the shop near her home: seven kilos of rice, half a liter of oil, seven eggs, three kilos of beans, six kilos of chicken and a pack of coffee.
“I buy what they give me and I always eat chicken,” she says as she cooks, upset because she doesn’t like that little bird.
How much is needed
Cuban economist Omar Everleny Pérez concludes in an analysis that a pair requires about $113 a month buy food for a month, including what they sell in foreign exchange stores.
Additionally, that same couple needs $233 to cover transportation, clothing, recreation, utilities, and the Internet.
Xiomara stopped drinking milk because a kilo of powdered milk costs 14 dollars in the small private shops that began to swarm in Havana after the government authorized SMEs (small and medium-sized enterprises) in 2021 that now also sell imported products.
Free market practices have deepened on the island thanks to the opening up to the private sector, promoted by Raúl Castro during his tenure (2008-2018).
On the island of 11.1 million inhabitants and where the average salary is $33one part of the population receives remittances and another, smaller group, bonds or other profits in state-owned companies.
Omar Everleny Pérez explained that families receiving remittances have higher incomes when they exchange their currencies for Cuban pesos.
The self-employed can also have a higher income. “I kind of support my kids with my small business,” said Armando Rodríguez, a 52-year-old independent bread seller. He believes he would need $400 to support his familybut sometimes you get half of it.
“What worries me is that the world has become more unequal for Cubans,” said Everleny Pérez.
The country is experiencing the worst economic crisis in three decades due to the tightening of the US embargo and the effects of the pandemic.
Inflation “How much has it gone up? I don’t know, but I know it’s strong, strong,” Xiomara exclaimed when she heard that rarely heard word in the past.
“Before (2021) there was no CPI” (Consumer Price Index) in Cuba, Pavel Vidal explained, but based on information generated with GDP “it can be said to be the “highest inflation” recorded in the islandeven above the crisis of the so-called Special Period of the 90s.
AFP agency
Source: Clarin
Mary Ortiz is a seasoned journalist with a passion for world events. As a writer for News Rebeat, she brings a fresh perspective to the latest global happenings and provides in-depth coverage that offers a deeper understanding of the world around us.