Inflation in Cuba has risen to historic levels following the implementation of a monetary reform in January 2021, which has led to an increase in the prices of basic commodities that are out of reach for most of the population. Despite wages and pensions increasing by 450% on average as part of the reform, inflation in 2021 increased by 70% and by 39% in 2022. Moreover, official figures are believed to underestimate real inflation by at least 5 to 6 times. Estimated real inflation in 2022 exceeded 200%, one of the highest in the world.
Cuban authorities had hoped that the monetary reform would reduce distortions in the economy, but high commodity prices have taken ordinary citizens by surprise, such as Xiomara Castellanos, a Cuban retiree who lives on a monthly pension of 1,528 Cuban pesos, equivalent to $13.8 at the official rate, about the same as a carton of 30 eggs ($14) costs today.
Cuban citizens, including independent workers, need more than $400 to support their families, according to independent bread seller Armando Rodriguez, reflecting a significant gap between income and expenses in the country. Shortages of food and basic goods have also increased, leading to greater reliance on the libreta de abastecimiento system implemented by the late leader Fidel Castro in 1963.
In response to inflation, President Miguel DÃaz-Canel will participate in a teleconference with his counterparts from Mexico, Colombia, Brazil, and Argentina, which also face rising inflation, to adopt common strategies to reduce consumer prices. The deepening of free market practices in Cuba has further increased inequality in the country, leading to concerns about the country’s current and future economic situation.