Cuba Standardizes Store Prices

Fernando Ravsberg

One of the common practices of shopkeepers in state-owned stores in Cuba is to mark up the prices on products – with the increases going directly into their pockets. Photo: Raquel Perez

HAVANA TIMES — The Ministry of Finance of Cuba has decided to standardize the prices of 100 basic products — from soap to the chicken — in all stores that sell in hard currency.

This leveling will mean a sharp reduction in prices; in the case of chicken breast, for example, it will sell for a maximum of €3.65 per kg, which implies a reduction of €1.23 compared to what was charged in the most expensive grocery stores. (1 Euro € = 1.24 USD)

Though all commerce in Cuba is monopolized by the government, supermarket chains had maintained price differentials. Administrative ineptitude of some of their managers, employee theft and multas (“commissions”) added to products were the main reasons for these differing prices.

With the action taken by the government it will be more difficult to disguise the poor management of supermarkets, theft will be limited a little and any “commissions” being charged will become more apparent.

The latter is a premium that is applied to products, one that ends up in the pockets of the managers and other store employees. The same stove could have cost €180 more in one store compared to another, just as the price differentials on two identical bikes could have ranged from €30 to €100.

“Commissions” are the most common tactic used by Cuban shopkeepers, but not the only one. Included among the others are adding water to chickens before freezing them so as to obtain greater selling weights, tapering with supermarket scales and punching holes in bags of detergent in order to steal some of their contents.

State-run warehouses, stores and markets have been the main sources from which the black market on the island is fed.

The new measure applied by the Ministry of Finance implies a reduction in prices in Cuba and new limits to the overcharging of consumers. Photo: Raquel Perez

Parallel operations in hard currency stores were so lucrative that jobs were sold for thousands of dollars. People on the island joke that you can determine how long a person has been working in one of these supermarkets by the number of gold chains they have hanging from their neck.

Ines Arguelles Gutierrez, the general director of pricing in the Ministry of Finance, said that hiring policy isn’t rigid enough and that the ministry is continuing to study other products that can be added to the list.

She added that prices of merchandise will be reviewed at least once a year to calculate the costs of imports, raw materials and other items.

In this manner protection will remain against price tampering on at least 100 basic food and hygiene products. Prices can no longer be manipulated at the expense of the consumer, despite the fact that prices in hard currency shops will still remain high.

Counting the food that’s subsidized (on ration cards) by the government, in addition to farm products sold in pesos and those products sold in hard currency, Cuban economists estimate that about €70 per month is required to cover the median family budget, almost double what the typical family receives in wages and pensions.