Without fear of being wrong,

prices and inflation are today one of the biggest concerns of Cubans.

The rise in the cost of living has become a daily phenomenon in all corners of the country and, regardless of the product, the place or the quality of the offer,

prices follow an upward spiral that many wonder how far it will go.

As the Minister of Economy, Alejandro Gil Fernández, acknowledged in the most recent session of the National Assembly of People's Power,

from January to October 2022 the average price of the basket of goods and services calculated by ONEI grew by almost 29%.

From October 2021 to October 2022, inflation increased by almost 40%.

These figures translate into

a lower purchasing power of the population and have a special impact on the most vulnerable sectors.

Shortage of supply, high costs and an informal exchange rate that moves in a growing speculative spiral explode on the boards in every corner of the Island.

Months ago, the economist José Luis Rodríguez pointed out in

Cubadebate

that inflation is related to a strong imbalance between a solvent demand and supply in the market.

The phenomenon can be caused by multiple causes, among which stand out

a drop in the availability of goods and services together with an increase in liquidity in the hands of the population.

The specialists point out that the contraction in the offer and a greater quantity of circulating money cause the appearance of speculative prices that

have nothing to do with the cost sheets for the generation of the goods nor with the associated expenses for their commercialization

, something that is currently appreciated both in state entities and in the private sector.

Faced with rising prices,

is raising wages the solution?

To this question, Gil Fernández replied that there are those who might think that increasing the purchasing power of wages and pensions will solve the problem, but this would only cause prices to rise if there is no greater supply.

In the parliamentary session itself, the vice prime minister also maintained that inflation is an effect of the lack of availability of foreign currency, the decrease in production plans, the supply deficit and indiscipline associated with the diversion of resources, speculation, the resale and illicit enrichment.

In addition,

there is imported inflation due to world market prices and expensive supply chains.

Consumer Price Index or Reflection of Inflation in Pockets

If you ask Luis Cordero Machado, Director of Prices at the National Office of Statistics and Information (ONEI), he quickly defines it:

the CPI is a macroeconomic indicator that reflects inflation

, and is obtained from three essential elements: 

  • A basket of goods and services

  • The weighting of those goods (that is, importance of one product over another) 

  • A structure of final household expenditure

In other words, it could be said that the CPI “allows us to know the average variation experienced by the prices of a basket of goods and services, representative of the consumption of the population in a given period”.* 

In the case of Cuba, to calculate the index, data from 2010 are taken as a reference, when the last national survey of household income and expenses was carried out, which includes preferences –with a weekly, monthly, semi-annual and annual period– in the acquisition of goods and services. 

The most recent CPI published by ONEI indicates that in December 2022 the increase in consumer prices (compared to 2010) was 270.03%

The three divisions that had the greatest effect on the monthly variation for December 2022 were food and non-alcoholic beverages (76.59%), restaurants and hotels (12.20%), and miscellaneous goods and services (5.31%).

Next, we show some of the maximum and minimum prices of some selected products in Havana: