In Cuba, a sharp gas-price hike arrives amid blackouts and shortages of milk and bread

Gasoline in Cuba will cost five times more starting Friday, a measure likely to drive other prices up amid news that the government can no longer distribute milk for young children nor bread for the population without help from international organizations and the emergent private sector on the island.

Following swift criticism from the public, Cuban officials postponed the price increase for a month, citing a “cybersecurity incident.” But the minister of finance and prices, Vladimir Regueiro Ale, said on state television earlier this week that the government had no other choice if it wanted to “correct economic distortions” and adjust the price of gas to the international market.

He also admitted the price hike will likely worsen galloping inflation.

“We know that this has consequences on the cost of production. The measure in itself has an inflationary impact; however, a group of decisions mitigate its impact,” he said, citing lower prices for private taxis that are a source of transportation for a significant number of passengers in cities like Havana, where availability of public transportation has declined.

Cuban government blinks, postpones controversial gas price hike amid widespread criticism

The government will also start selling gas in dollars in a couple of dozen service stations around the island, hoping to capture foreign currency it says it will use to buy oil.

Cuba’s population is suffering hours-long electricity blackouts, a situation officials blame on the higher price of oil. The state electricity company said to expect blackouts on Friday night because it will not be able to meet over a third of the projected demand.

But a recent analysis by Reuters of oil shipments to the island raises questions about the government’s narrative, concluding that generation and distribution problems inside the island may be the main culprits for the crisis instead of supply.

On Friday morning, gas stations were closed, a measure the government said was necessary to update the systems with the new prices.

As expected, the price of the dollar rose another four Cuban pesos Friday and reached 314 pesos to the dollar. That leaves the average monthly state pension, 1,528 pesos, worth less than $5.

Inflation and an ever-rising cost of foreign currencies have left most of the population living on poverty wages. The dramatic collapse of agriculture and food production in the past few years has made matters worse, increasing fears about hunger and malnutrition on the island.

Agriculture Ministry officials said that in 2023 the country produced a billion fewer eggs and 122 million fewer liters of milk than the previous year.

Last week, officials said the government could not buy the flour needed to provide the single bread roll given to Cubans daily with their food ration cards. They blamed the “financial restrictions” of the U.S. embargo — even though the sanctions authorize the sale of food by U.S. producers to the island.

Though the price of wheat flour has decreased almost 30% year over year, shortages of bread have been ongoing for months in provinces like Guantanamo and Sancti Spiritus, prompting the local governments to partner with private enterprises that can buy the flour abroad. Emerio González Lorenzo, the president of a state-owned food production conglomerate, said last week that the government was “trying to buy” all the flour imported by private enterprises to cope with the current crisis.

Maria Gallar, a spokesperson for the United Nations’ World Food Program, said Cuba has requested support to provide powdered milk for children.

Cuba does not produce enough milk to make it available to the entire population. Only children under age seven and patients with some chronic diseases and dietary needs receive powdered milk monthly through the ration card. Officials said the government needs 2,000 tons of powdered milk each month to meet those needs.

Gallar declined to comment further, but according to the Spanish news agency EFE, which first reported the request to the U.N, this is the first time the island’s government has asked for food deliveries from the World Food Program. The agency said the government asked for aid at the end of last year, and the program sent 144 tons in February.

On Friday, the Communist Party newspaper Granma said that the delivery of milk to children under seven would be possible “in the coming days” thanks to a shipment of 375 tons of powdered milk from Brazil. The paper also said the government bought more milk in Brazil, Canada and other countries, including the United States.

“Five hundred tons of milk have been contracted with the United States, under the exceptions established by that government to sell certain products to the island,” the paper said in a rare acknowledgment of exceptions in the embargo to allow U.S. exports of food to the island.