August 15, 2019 / 6:37 PM / 3 months ago

Cuban government imposes price controls as it seeks to keep lid on inflation

HAVANA (Reuters) - Communist-run Cuba has imposed price controls on goods and services ranging from lemons and pork to haircuts and taxi fares in what it says is an effort to tame inflation as it increases state wages and pensions.

A vendor sells pineapples at a fresh produce market, in Havana, Cuba August 15, 2019. REUTERS/Stringer

On Thursday, prices in Havana were set for some basic foods such as beans, pork, lemons, bananas, onions and cabbage.

In recent weeks, regional authorities have slapped price controls on taxi fares, beverages and haircuts, among other items. The price controls differ from province to province.

Cuba has controlled prices of certain goods in the past but the new controls mark a more systematic approach.

President Miguel Diaz-Canel announced last month a series of emergency measures to fight economic stagnation and dwindling foreign currency earnings that began in 2015 as the economy of key ally Venezuela imploded, and which have been aggravated by a series of new U.S. sanctions.

The measures included increased wages and pensions for more than 2 million state employees. That amounts to 8 billion Cuban pesos annually, equivalent to 13% of this year’s budget.

The government is also introducing price controls and still-to-be-announced policies aimed at stimulating local production to meet increased consumer demand without sparking inflation. It estimates inflation was 2.4 percent in 2018.

The price controls apply both to state-run companies that dominate the economy, and a growing private sector of cooperatives, farmers, small businesses and self-employed individuals who, for example, sell produce or drive taxis.

Pork, a staple of the Cuban diet, has been set at 45 pesos a pound, although market sellers said it previously went for some 65 pesos a pound.

“With the new prices we are super asphyxiated because the farmer who moves the pigs to Havana still charges 28 pesos a pound,” butcher Humberto Soler said, as he slapped ribs on his stand.

Other vendors in Havana were also unhappy.

Produce seller Laura, who declined to provide her last name, said she was no longer selling lemons, as the fixed price of 10 pesos to 15 pesos was the same she paid farmers. Previously, she had sold them at 30 pesos a pound.

The measures show the government is increasingly concerned about the influence of self-employed and cooperative businesses in the agricultural sector, said Paul Hare, a former British ambassador to Cuba who lectures at Boston University’s Pardee School of Global Studies.

“The vestiges of market elements that had been introduced in certain areas are being eradicated in another message that the government does not want them to expand,” he said.

Reporting by Marc Frank, Editing by Rosalba O'Brien

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