The euro hit a record high of 400 Cuban pesos in the informal market in Cuba on Wednesday, signaling a worsening of inflation on the island. According to economist Steve Hanke from Johns Hopkins University, the inflation rate in Cuba was at 104% year-on-year on May 6, up from 95% just a few weeks prior.
The minimum wage in Cuba now equates to just 5 euros and 25 cents, while the US dollar stands at 392 Cuban pesos. The Cuban peso has depreciated significantly against foreign currencies in recent months, causing a serious cash shortage for residents.
The government has announced plans to intervene in the informal currency market, but experts warn that this could lead to further devaluation of the Cuban peso. Economists estimate that the real average salary in Cuba is now two-thirds of what it was in 1989, making it difficult for families to cover even basic needs.
The widening gap between the official value of the Cuban peso and its value on the free market is causing concern among experts. Some predict that a devaluation of at least 200% of the national currency will be necessary to stabilize the economy. However, without accompanying adjustments in the real economy, such measures may ultimately fail to address the underlying issues.
Overall, the economic situation in Cuba remains challenging, with inflation rising and salaries failing to keep pace with the cost of living. The government’s handling of the crisis will be critical in determining the future of the country’s economy.