Cubans reacted Thursday with “pain” and “disbelief” to the announcement by the authorities that inflation in the last 10 months stood at 60% for retail prices and up to 6,900% in the informal foreign exchange market, amid severe shortages of food and medicines.
President Miguel Díaz-Canel said on Thursday, at the closing of the ordinary session of the National Assembly of People’s Power, that the monetary reform implemented last January 1 was “a step that could not be postponed” to raise business efficiency, but it has had “undesired effects on the lives of citizens, which today is expressed above all in the harmful inflation”.
This financial reform implied an average wage increase of 450%, but also an increase in prices and services. The minimum wage was set at 2,100 pesos per month (US$87).
The head of the government commission in charge of implementing this reform, Marino Murillo, announced on Wednesday that retail price inflation was 60%.
But that figure “does not coincide with what people are experiencing. People are experiencing prices seven, 10 times higher” (i.e. inflation of 700 or 1000%), Murillo said. “When I added the levels of the informal (foreign exchange) market, inflation would be much higher,” at 6,900%, he acknowledged.
Foreign currency is exchanged at higher prices on the black market every day. Many of the products necessary for the daily life of Cubans are only sold in stores in foreign currency, to which not everyone has access.
Thus, resellers sometimes offer products to the last consumer three or four times more expensive than what they cost in these already expensive stores.
Cuba is suffering a deep economic crisis, with a further contraction in GDP of 13% from January 2020 to September 2021 due to the effects of the COVID-19 pandemic, and the prospects that the communist dictatorship will do anything to lift the country out of misery are increasingly distant, since the necessary measures would weaken the government that would establish them.