The Hanke index, which measures prices based on the dollar, places the increase at 42%
14ymedio, Madrid, 16 September 2024 — Price controls on private sales in Cuba, in force since mid-July, may be behind the containment of the consumer price index this August. Official data show that last month, general inflation barely rose by 0.42%, particularly for the sectors of Food and Non-Alcoholic Beverages, which increased by only 0.02%. With these figures, the annual variation remains at 19.3%, while the year-on-year is 30.12%, still very high for the punished pockets of the citizens, but moderate compared to previous months.
In addition, the informal market’s inflation, which is measured by the American economist Steve Hanke and includes the effect of the exchange rate with the dollar, reaches 42% year-on-year, despite the stabilization of the greenback at 320 pesos after having grazed the 400 bar.
The coincidence in a moderation of the increase in the CPI in both the official and informal market data points to a possible reaction to the price cap in private stores of six products considered of basic necessity by the Government. It is also consistent with the paralysis of the exchange rate in the informal foreign exchange market, but it is not a guarantee of good news. As the Observatory of Currencies and Finance of Cuba (OMFI) pointed out in its report last week, the cost of this measure is “increasing shortages and strangling consumption.”
By sector, the prices of Alcohol and Tobacco fell (-0.3%), although the increases at the beginning of the year weigh down this sector. Cubans have paid 38% more so far this year and 50% more if compared to August 2023.
Food is another sector that rose the most year-on-year, almost 34.9%, despite its record decline this month
Food is another sector that rose the most year-on-year, almost 34.9%, despite its record decline this month. Onions (4.4%) and eggs (4.16%) are the only products highlighted for their rise, while avocado (-8.6%), rice (-5.7%), processed cheese (-4.7%) and white cheese (-4.4%) fell, in addition to cooking oil (-3.6%), one of the products capped by the Government.
It is followed by the year-on-year increase in the Restaurant and Hotel sectors, which essentially also include food. Although in August they rose by just 0.34%, so far this year they have increased by 19.2%, and in relation to the same month of 2023, 30.1%. In this sector, the party or birthday buffet (3.25%) leads the increases, followed by breakfast (1.4%) and soda (1.2%).
Transport rose in August by only 0.58% and puts its annual growth at 22.8% and year-on-year growth at 31.6%. Although it is almost an achievement after having quadrupled the official prices at the beginning of the year, these increases represent a great impact for the mobility of Cubans every day. In this section, the strong rise of urban motorcycles (4.12%) and urban taxis (3.4%) stands out, followed by other interurban (2.8%) and urban (1.26%) transport, while the intercity taxi increased its price by only 0.6%.
This August, the sector of various Goods and Services (1.35%) stood out for its increase, dragged down by shampoo (2.8%), conditioner (3.1%), deodorant (1.4%), hair dye (1.9%) and manicure (1.8%). In addition, toothpaste increased by 7.9%, the highest of any product last month. OMFI also highlighted the “beach excursions” for this holiday month, which increased by 4.8%.
There was much less increase in the sectors of Education (1.17%), Housing services (1.11%), Clothing and Footwear (0.98%), Recreation and Culture (0.75%), and Communications (0.04%). The Health sector did not change (0%), while Furniture and Household items fell by 0.2%.
In the midst of this scenario, where the first signs point to a worsening for September, we must take into account the depreciation of the currency, which has seriously added to the increase in prices. According to Hanke, the Cuban peso has devalued against the dollar by 22% so far this year.
Translated by Regina Anavy
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