Cuba’s “official” inflation rose to 44.5% year-on-year in February amid fuel shortages 

Official prices regulated by the dictatorship rose 2.6% at the end of the second month of the year and increased almost 5% in the first two months.

Food, basic products, and fuel are in short supply.

The government demonstrates a manifest inability to control the nominal nature of the economy.

Cuba’s Central Bank announced that “official” retail prices increased by 2.61% in February 2023, accumulating a jump of 4.99% in the first two months of the year.

Likewise, the average monthly increase between January and February represented 2.47%, a very high figure compared to the average of 0.53% observed in the first two months of 2022.

Thus, the regime officially acknowledged that legal retail price inflation climbed to 44.5% year-on-year in February.

This is the largest 12-month cumulative increase since December 2021.

The inflation recorded between 2021 and 2023 is the most severe since the so-called “special period” following the collapse of the Soviet Union.

Prices in state-owned stores are tightly regulated and regulated by the state and are not representative of the level of shortages to which the population is subjected.

But even under these parameters, the regime led by Miguel Díaz-Canel was forced to recognize a certain threshold of increases to accompany the chaotic speed with which the money supply expanded.

According to alternative estimates prepared by US economist Steve Hanke, Cuban inflation in informal markets could have climbed up to 80% year-on-year in February 2023, practically double the official variation published by the regime based on strictly official prices.

This places the country as the ninth economy with the highest inflation rate in the world, according to the methodology used by Hanke.

The parallel exchange rate climbed to $185 per dollar for sale, accumulating a variation of 79.61% in the first week of April 2022.

The exchange gap exceeded 48% concerning the official selling dollar of the Central Bank, which closed the second week of April at $124.6 per unit.

The country’s exchange rate structure is still chaotic and disorganized since although the population is exposed to a dollar that varies from $124 to $185 (depending on whether or not the official market is accessed), state enterprises and the public sector in general, perceive an exchange rate of $24 per dollar, extremely appreciated compared to the evolution of prices (including official ones).

The gap concerning the latter exchange rate amounts to 671%.

Financial repression leads to the proliferation of shortages of basic goods and services.

In addition to the shortage of hygiene products and basic foodstuffs, the island is experiencing an acute fuel shortage.

Consumers must spend hours to days at state-run gas stations waiting for energy supplies.

Arbitrary pricing has caused major problems for the production of state-owned crude oil refineries, so the regime has resorted to more imports from the Venezuelan state-owned PDVSA (about 76,000 barrels per day as of March).

US economist Steve Hanke estimates that inflation on the island would have reached 81% year-on-year in February 2023, and the Cuban peso would have lost most of its value over the past year.

With information from La Derecha Diario