Solvent demand becomes reanimated

The sale of high-consumption goods shot up in Cuba after the price reductions implemented starting April.

The sale of chicken tripled after the price reduction implemented in April.

As a first reaction, the sale of those products whose prices the Cuban government lowered a few months ago grew by 50 per cent. Officials from ministries and commercial chains gave the information during a TV programme, Mesa Redonda (Roundtable), to analyse the measures applied in the so-called hard currency collecting shops.

The population’s purchases shot up after the authorities implemented three successive reductions of the prices for food products and other goods starting April. As initial evidence, many shops have experienced a lack of supply that has generated tensions in the domestic supply systems and empty shop windows and shelves, according to denunciations of the consumers reported by the national press.

The possibility of purchasing a greater amount of products with the same amount of money initially encouraged consumers, though the population is waiting and requesting new advances.

The possibility of purchasing a greater amount of products with the same amount of money initially encouraged consumers, though the population is waiting and requesting new advances.

 

The TRD Caribe chain, which manages some 2,500 establishments throughout the country, including small barrio outlets, had to introduce emergency measures to face the commercial increase. The demand increased by more than 50 per cent with respect to the sales they had before, the economic director of that firm, Maray Abreu, said.

 

“During this period we put into practice fast actions, like the installation of fridges in the establishments, the implementation of cold chambers, among others,” she explained.

 

The first price reduction was applied on April 22. The price for a group of food products, like chicken, minced meat and vegetable oil, was lowered by around 20 per cent. The second package of measures was applied through the correction of the price formation index: the Finance and Prices Ministry took the marketing index to a scale of between 1.35 and 1.50, which the government had maintained at 2.40 since these shops began operating in the 1990s.

 

A representative from that Ministry insisted, however, in that that rate had been contracted in practice because of the price hike in the international market and the import costs. “What has actually occurred is that the costs have increased and this has been contracting the index,” Deputy Minister Alejandro Gil said.

Finance and Prices Deputy Minister Alejandro Gil defended the gradual implementation of measures to strengthen the purchasing power of the Cuban peso.

Finance and Prices Deputy Minister Alejandro Gil defended the gradual implementation of measures to strengthen the purchasing power of the Cuban peso.

 

The sales director of the Domestic Trade Ministry (MINCIN), Francisco Silva Herrera, specified that the increase had been greater in some products: the sale of chicken has tripled, while that of oil has doubled, he reported. The sale of peas also grew by more than 50 per cent and 37 per cent for rice, another classic food product in the Cuban diet. Powdered milk, an also highly demanded product, grew by 22 per cent.

 

In order to absorb the increase of the solvent demand, 220 establishments were added to the retail chicken commerce. In other units double work shifts were established for the processing and distribution of this product, in addition to extended schedules in warehouses and shops. The areas for the sale of personal hygiene products and other goods that also benefited from the lowering of prices were also expanded.

 

Another chain with important sales, Cimex, also established emergency measures. The financial economic vice president of this business group, Leticia Morales González, said they speeded up the programme of investments of the cold storage capacities, in the shops as well as in the units located in intermediate establishments to bring closer the replenishing of the outlets.

 

Though the population initially received the lowering of prices with rejoicing and went out to buy especially highly demanded food products, the surveys and feature articles of the Cuban press indicate that there is still dissatisfaction because the prices are still way above the average income.

 

The essential purpose of these reductions, applied parallel to the adjustment of prices in other markets, is to improve the purchasing power of the Cuban peso, Deputy Minister Gil said. But he defended the gradual character with which it was necessary to apply them. “You can’t take big leaps,” he said. He warned that a lowering of prices generates a hike in demand that endangers the sustainability of supply.

 

The first reactions of consumers prove him right. (2016)

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