Cuba to raise prices, essentials to stay same

HAVANA -- Struggling with a financial crisis, Cuba's communist government announced major price increases Friday at the country's dollar stores, but promised the cost of basic foodstuffs and other essentials would remain the same or decline.

Under the measures taking effect Monday, the government will "reduce the prices of a gamut of primary need and wide consumption products, especially food, and increase those for a series of articles," the Economics Ministry said in a communique published Friday in the Communist Party daily Granma.

Price changes will be decided "more or less on the type of product," it said.

All price increases will occur in the island's dollar stores, where Cubans and foreigners can buy products ranging from packaged foods to electronic appliances with the U.S. currency.

The Economics Ministry gave no exact figures on how much more imported items such as electronics, foreign cigarettes and gasoline would cost.

Written guidelines for prices have been circulating among state enterprises and the general population in recent days, but it is unclear if the price changes listed are simply proposals or have final government approval.

The most dramatic increase on one such list calls for gasoline to be raised from $2.85 to $3.99 a gallon for regular grade, and from $3.42 to $4.56 a gallon for premium.

The price increases appear mostly aimed at imported consumer goods, including shoes, clothing, hair care products and audio equipment.

Mild price reductions evidently are planned for more essential goods, including food such as powdered milk and chicken, the most basic personal care products such as soap, toothpaste, disposable diapers and sanitary napkins.

Cuba, which imports about $600-million annually in foodstuffs, says its economy has been battered in recent months by rising world prices for imported petroleum products.

At the same time, international prices for sugar and nickel -- two of the island's primary exports -- are down. So is tourism, which in recent years has replaced sugar as the island's No. 1 source of hard currency, earning as much as $2-billion annually. The Tourism Ministry recently reported a 14 percent drop in tourism during the first quarter.

The Economics Ministry said dollar stores have maintained prices without "any important changes" since they were opened in 1993 after Cuba allowed citizens for the first time in decades to legally hold and use American dollars.

Selling products in dollars has given the government a way to more easily capture the hard currency it needs to buy imported products such as gasoline.

According to the Labor Ministry, of Cuba's 4.3-million member work force, 1.1-million receive at least part of their salaries in U.S. currency.

A large percentage of the population also receives dollars from relatives living outside the country.

Those annual remittances are estimated in the hundreds of millions of dollars.

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