Cuba increases the price of gasoline by more than 400%

Gas stations in Havana opened with shorter queues than usual and sad faces among drivers this Friday (1st), when the government increased the price of gasoline fivefold as part of a plan to reduce the fiscal deficit.

On Wednesday, the Minister of Mines and Energy, Vicente de la O Levy, announced “new retail fuel prices” that would be implemented on March 1st, on the social network X, also communicating a “new electricity tariff for consumers above 500 kilowatts/hour”.

The objective is to “achieve fuel replenishment and generate savings for those who consume the most” electrical energy, added the minister.

The increase in gasoline prices has caused great concern among the population, who expect an increase in prices in the country, amid galloping inflation that has hit the island since 2021. Prices rose 30% in 2023 and 39% in the previous year, according to official data considered underestimated by experts consulted by AFP.

“So it’s official, there’s no need to go around or be surprised, that’s how things are here”, laments self-employed worker Alejandro Valdés, 33 years old.

In January, the government had already announced the measure, which caused crowds and long queues at gas stations. The authorities then decided to postpone its entry into force, citing “a cybersecurity incident in computer systems” that prevented the application of the new values.

The price of a liter of regular gasoline went from 25 Cuban pesos (5.19 reais at the current price) to 132 (27.40 reais), which is equivalent to an increase of 428%, while added gasoline went from 30 (6. 20 reais) to 156 Cuban pesos (32.38 reais), which represents +420%.

For Cuban economist Pedro Monreal, this increase “‘corrects’ a distortion”, by selling gasoline at a real price, but will have “transversal effects, increasing the distortion of salaries misaligned with the cost of living”, he stated on the social network X.

The minimum monthly wage on the island is 4,200 Cuban pesos (almost 872 reais).

The authorities postponed the increase in retail fuel prices, which was supposed to be doubled for public and private transport, but for taxi and bus drivers who work independently, they began to increase these values since January, when the measure was announced. They also extended a planned increase in natural gas.

Cuba is facing its worst economic crisis in three decades, in addition to a chronic fuel crisis that worsened in April 2023, due to the effects of the pandemic, the strengthening of the United States embargo and the internal weaknesses of a monetary reform that began three years and did not obtain the expected results.