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Shortages and inflation frustrate Cubans struggling to get by


Julia Sardiñas woke up early so she could reach a grocery store in the Cuban capital at 6 a.m.

After seven hours of queuing, she reached her goal: the purchase of two one-liter plastic bottles of cooking oil for which she paid 48 Cuban pesos — $2 — each.

“I stood for many hours; you have to wait your turn to get in for two bottles, but that’s something,” said the 65-year-old retiree.

Grocery shopping has become an increasingly expensive and arduous struggle for many people in a country where the pandemic, inefficient production, government controls and US economic sanctions have worsened an economic crisis.

A drastic drop in crucial tourism revenue caused by COVID-19 prompted the government last year to adopt reforms it had long considered. These included eliminating an inefficient dual currency system that had made the local peso – in which most Cubans were paid – a sort of second-class currency. It was a poor cousin of the “convertible peso” used by tourists, people who worked with them and those who received money from relatives abroad.

The adoption of a single currency for all, combined with shortages, led in a few months to a sharp increase in the prices of many goods which was not offset, for the most part at least, by the simultaneous increase in wages.

And because the government struggled to produce or import all the necessary goods, it also led to the emergence of a black market, with people paying a premium for dollars or rare items.

This led to limits on individual purchases. The state store where Sardiñas bought her oil scanned her ID to make sure she didn’t buy more than two at a time.

The problems have fueled a sense of inequality among many that is particularly bitter in a socialist system that prides itself on a relatively equal distribution of goods.

“It is impossible to support my family on my salary,” complained Marcia Ochoa, a state employee who said she earned 2,400 pesos – $100 at the official rate – every month and that lived with her husband and elderly parents.

She said she was dependent on money her son sent to the United States to help buy things like soap, shampoo and food.

Life got more complicated when the administration of former US President Donald Trump tightened economic sanctions against Cuba in November 2020 and blocked remittances through Western Union.

Her son sent her about $100 a month via Western Union. “I could go to a store to shop and solve many problems.”

With these exchange houses closed, she relies on visitors bringing money from her son and recently got around 70 pesos to the dollar on the informal market, nearly three times the official rate. This black market rate over the past week has increased further, to around 100 to 1.

To help deal with shortages and bring in hard currency, the government has also extended a network of hard currency stores which are often better stocked but much more expensive than standard stores. They now accept dollar-linked debit cards, but not cash itself. Cubans can use Euros or Canadian dollars to purchase such cards.

But long queues are now common at local and hard-currency stores, where products ranging from soap to beans to chicken tend to appear suddenly and disappear quickly.

This has led to a growing black market as people speculate by buying what they can and reselling it days later when shortages increase.

In recent weeks, the price of powdered milk has hit around $40 a kilo ($18 a pound) on the black market

“There are many factors (for the rise in prices), but the principle is the fall in the supply of goods and services,” said economist Omar Everleny Pérez.

The government itself has recognized inflation as a serious problem.

Economy Minister Alejandro Gil said overall prices rose by around 70% in 2021, although the increases for some products were clearly much larger.

A carton of 30 eggs cost 150 pesos – $6 – last year, but they now cost 400 pesos on the black market. A packet of sausages that used to cost 40 pesos now costs 118 even in official stores. Pork that used to cost 40 pesos a pound now costs 200.

“In the country, it’s the subject of the greatest debate and concern,” Gil told state television recently. “We are constantly looking for alternatives to the extent of our possibilities.”

He said the problem was due to “a supply shortfall”, given limited domestic production, which “brings with it speculation and resale” of goods.

Still, he noted that prices for electricity, communications and subsidized basic rations have remained stable, even as rations have been reduced in recent years.

Inflation and shortages were frequently cited complaints by Cubans who took to the streets in near-unprecedented protests last July.

As the government moves to allow more private business into a system that was once almost entirely state-controlled, many economists say it needs to be even more flexible, for example by allowing freer exports and imports. and allowing more professionals to work privately. Some call for greater autonomy for state enterprises, which, according to estimates, employ 70% of Cuban workers.

“There are many short-term macroeconomic imbalances that are strangling part of the population and businesses,” said Oscar Fernandez, an economist at the University of Havana.

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Andrea Rodríguez is on Twitter: www.twitter.com/ARodriguezAP



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