Interannual inflation of the Cuban formal market at 31.78% in November

Interannual inflation of the Cuban formal market at 31.78% in November

HAVANA, Dec. 12  The year-on-year inflation in Cuba’s formal market stood at 31.78% in November, compared to 34.05% in the same month of 2022,due mainly to increases in restaurants, transportation and food, the National Office of Statistics and Information (ONEI) reported this Tuesday.

This organization does not reflect the evolution of prices in the majority and best-stocked informal market on the island, which is more affected by inflation due to its absolute lack of regulation and the severe shortage of basic products in the formal market.

The consumer price index (CPI) increased by 2.29% compared to the previous month, specified the ONEI, which puts the accumulated inflation until November at 27.03%.

By category, the year-on-year increase in Restaurants and Hotels (49.33%) stood out, followed by Transportation (37.49%) and Food and Non-Alcoholic Beverages (37.11%), traditionally the most inflationary items.

All categories experienced year-on-year price increases, many with double-digit rates, except Alcoholic Beverages and Tobacco, which fell 19.46%. The least inflationary were Health (0.99%) and Communications (0.46%), sectors controlled by state monopolies.

This strong increase in prices follows that registered in 2021, when the ONEI estimated inflation at 77.33%, and the 39.07% rebound in the Cuban formal market in 2022. There are no alternative CPI measurements to the official one in Cuba.

There is also no reliable data on the evolution of the Cuban informal market, where some prices of basic products have doubled in the last 12 months. Some independent estimates put informal market inflation in 2021 at around 500%.

Since Cuba imports 80% of what it consumes, according to UN estimates, the depreciation of the Cuban peso (CUP) with respect to the dollar (the currency in which it is purchased abroad) is relevant in this inflationary spiral.

In the last 12 months, the Cuban currency has gone from 175 CUP per dollar in the informal market to the current 270 CUP, a depreciation of 54%, according to the exchange rate prepared by the unofficial media El Toque, converted into an index of reference for media and experts.

Cuba has been going through a serious economic crisis for three years, something that is evident in the shortage of basic products (such as food, medicine and fuel), the partial dollarization of the economy, the depreciation of the peso, prolonged and frequent blackouts and a strong increase Of the prices.

The effects of the pandemic, the tightening of US sanctions and errors in national macroeconomic and monetary policy are the main causes of this crisis, which is fueling migration – mainly to the US – and social unrest.