Tariff hikes hit Cuba like a bucket of cold water, and experts expect more inflation

Announcement of Increase in rates of basic services and gasoline Starting next week, it fell like a bucket of cold water on Cubans and drew criticism among experts on Tuesday.

On Monday night, ministers and high-ranking officials appeared on Cuban television to set the date and amount of increases already mentioned in December by the island’s authorities, sparking unrest.

Fuel prices will increase by almost five times, and gas and electricity will increase by 25%. According to experts, these figures will put further pressure on salaries.

The new rates will begin in February for fuel and in March for power and liquefied gas, authorities reported.

“The salary of the workers is not enough even for the basic basket,” he complained in the statement Associated Press

Cuban Yanei Vazquez, a 47-year-old government worker. “They are leading people to hold demonstrations because they are driving them against the wall. “I’m very much a Fidelist (referring to Fidel Castro) and I agree very much with the economy that Fidel had, but it’s not there anymore.”

2023 ended without being able to take off on the island A crisis that began with a pandemic and a radical increase in US sanctions A push for political change, according to authorities. Analysts say shortages, long lines, deterioration of public services, power outages—especially in July and August—and increased migration have further affected the quality of life for all Cubans.

“When one thing goes up everything around it goes up and prices will continue to go up and if transport costs you ‘x’ now it will cost you double ‘x’,” he estimated. Ap Alicer Perez, a 41-year-old jeweler.

Last December, Prime Minister Manuel Marrero gave information about this Popular power assembly —Parliament—on an adjustment plan that was moving forward to 2024, but without specifying the amount or dates for implementing the measures. Then it has already removed the worries of many citizens.

Certainly in that parliamentary session, officials realized that In 2023, Cuba’s gross domestic product contracted between 1% and 2%; And inflation was 30% per annum After the price hikes of 2021 and 2022, especially in the wider state sector, without wages to recover their purchasing power.

On Tuesday, the minister of finance and prices, Vladimir Reguero, reported that, for example, premium gasoline – which is used by a good portion of cars on the island – will cost from 30 Cuban pesos to 156 Cuban pesos, five times more than various fuels and diesel. will have the same behavior.

The price takes on different meanings depending on the exchange rate used for its equivalent in dollars, that is, if it is multiplied by 24 pesos – the official exchange rate – the price of a liter will be just over $6.00, but for 120 pesos – the rate that the state itself The same offers individuals when they give cash – will be 1.3 dollars.

Even more, if the exchange rate on the black market—which Cubans actually use on a daily basis—is considered 270 pesos per dollar, the price of a liter of gasoline would reach 0.5 cents on the dollar.

But anyway A state employee will continue to earn about 7,000 Cuban pesos per month With the help of which you can get about 44 liters of gasoline.

New fuel rates will be announced with the opening of 28 gas stations that will sell directly in dollars And with which they want to support tourism on the island. Preferential wholesale prices for transporters will be maintained.

The government suggests that the increase in rates tries to prop up the depleted state budget, which – it says – suffered both the consequences of the pandemic’s productive decline and the sanctions of the United States, in order to adapt to international prices.

Miguel Diaz-Canel He denied that it was a neoliberal package, but an adaptation within the framework of US sanctions. And Raul Castro supported the measures.

But experts relativized the argument.

“Two points of reference: international oil and gas prices are lower today than a year ago, and subsidies for electricity and liquefied gas are generally large in Cuba,” he wrote on his X account, before Twitter, Cuban expatriate economist Pedro Monreal, while Warns about the impact on citizens’ pockets.

Cuba’s February Inflation Shows ‘Promise’ The retail price of regular gasoline will increase by 428%, which will affect other prices and rates. So far, fuel has not been a factor in the increase in the consumer price index,” Monreal said.

(AP)