With the new openness to the private businesses in Cuba, I have observed an economic phenomenon that I don’t understand.
Theoretically, by increasing the supply of goods and services to a fixed demand, the prices should go down.
Nevertheless when I going to a cafeteria, I find that the fruit juice that used to cost 2 pesos now costs 3 in many places. Even in the barbershop where they had charged 5 pesos for a haircut, they now want 10.
The same thing goes for other things.
A glass of Kool-Aid that had gone for 1 peso now costs 2 in many places.
And it’s the same with pastry, whose prices have risen by one or two pesos.
There are private taxis and van routes whose prices have also shot up.
Is there anyone out there who can anyone explain this phenomenon?