Stores in national currency will be able to set the prices of the products they sell according to a resolution of March 30 published on the official Gazette this Tuesday. Chain store bosses will now have the power to decide how much the items they have available will cost except for a group that is considered essential, such as edible oils, chicken thighs and drumsticks, and ground poultry and beef.
The new provision indicates that these measures will be carried out under the supervision of the president of the Business Administration Group (Gaesa), who will inform “this Ministry about the results obtained from the decentralization process, at the end of 2022.” Gaesa is the military conglomerate that owns several chains of hard currency stores and is directed by General Luis Alberto Rodríguez López-Calleja, former son-in-law of Raúl Castro and a strong man of the regime.
The group of products with the controlled price also includes national hygiene and cleaning items of economic line, such as toilet and bath soap, detergents, toothpaste, deodorants and blankets.
The group of products with a controlled price also includes national hygiene and cleaning items of economical line, such as toilet and bath soap, detergents, toothpaste, deodorants and blankets. Attention is drawn to Havana Club rum, which is also a protected product.
The rule indicates that, when setting prices, “current general principles are taken into account, with a comprehensive evaluation of costs and expenses with criteria of rationality and efficiency, as well as the correlation with market benchmarks.”
The authorities have called this measure “decentralization of powers to the business system,” while the Cuban economist Pedro Monreal has described it as Ordering Task 2.0. The expert considers it “a risky bet, with no explanation of its economic rationale” and believes that this future “microeconomic price flexibility” can “provoke macroeconomic instability.”
For the economist, the decision seems to be based on the fact that there will be a positive effect of profitability on investment, instead of a negative effect on aggregate demand due to the reduction in real income, which can make the complex situation worse, since that there is full conviction that prices are going to rise, in the current context of high costs for production due to the increase in the cost of raw materials, imports or freight, among other things.
The first reactions to the news, disclosed by the official media Prensa Latina and CubadebateThey couldn’t have been worse. There is a panic among the population that prices are going to increase immediately and they fear that companies will raise prices trying to obtain higher profits.
“Another measure that instead of curbing inflation and favoring the population, favors the profitability of companies, already very high given the sales in the discriminatory stores in MLC. Let’s see the prices they set now, obviously in Instead of lowering prices, they will rise like everything that has been left to the discretion of business groups, in a scenario of almost zero retail competition,” warns a reader who manages to capture the attention of a Ministry spokesman who responds to him.
Companies cannot make arbitrary use of these powers, but must apply principles and procedures that allow them to cover the costs and marketing expenses.
“The decentralization process of powers for the approval of prices is aimed at strengthening the powers of the business system. (…). The increase in prices in the international market and the complexity for our country of accessing financing for its acquisition, with additional increases in freight costs. Companies cannot make arbitrary use of these powers, but must apply principles and procedures that allow them to cover marketing costs and expenses. Certainly, the process demands supervision and control that allows to identify the deviations, violations and to rectify opportunely”.
Although the concern is visible in the majority of comments on the news, there is also an important sector that seems disillusioned and makes fun of the repercussions that a measure like this can have at a time when stores in national currency are conspicuous by their absence or they lack any product whose price can be liberalized. The scarcity of offers in this context is a determining factor, since prices will go up as it is scarce.
“Please, it makes me laugh, what are the stores for pesos that sell these items here in Mayabeque? Another more unpopular measure, against the working people, since with the miserable salaries they will be able to [comprar] less, since each boss is going to set the price they want”, replies a commentator. Another user, on Twitter, synthesizes the idea: “Don’t worry, in national currency they don’t sell shit in this country, there are no problems” .
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