Cuba hikes dollar prices

Fidel vows to fight on - but the economic cost is heavy

Cuba has hiked the prices people must pay for a range of goods sold for US dollars, sparking complaints and panic buying.

In a statement in the state-run media, the economy ministry said the measure "will mean lower prices on a range of vital products broadly consumed, in particular food, and an increase in a series of items which, though they are also necessary, are not the same".

The changes do not come into effect till Monday 3 June, and till then the government is keeping quiet about exactly which products are to be affected.

Likely candidates for a 10% price cut include milk, chicken, pasta, soap and toothpaste.

Petrol, on the other hand, is likely to go up in price by 30%, along with clothes, cigarettes, cosmetics and electronic goods.

But it seems likely that the move is designed to help prop up the scarce foreign currency reserves, needed to import fuel and food.

Blocked

The cost of imports is rendered higher thanks to the uS embargo, which started after the revolution in 1958.

Cuba's economy continues storm-tossed thanks to the embargo

Despite the recent visit by former President Jummy Carter, and a growing swell of opinion within the US that it only serves to keep Cuban exiles happy and voting for the Republicans, the Bush administration is adamant about keeping it in place.

Since 1993, when tourism was freed up as life grew ever more difficult following the collapse of Cuba's key ally, the Soviet Union, the peso and the greenback have circulated side by side.

Dollar goods are more plentiful and often of better quality than those sold in peso-denominated stores.

While Cubans are paid in pesos, off-the-books earnings in dollars from tourists and travellers are used to supplement the shopping. About 30% of Cubans have some dollar savings, the economy ministry believes.

"Times have changed... due to the international crisis," the ministry said.

Added pressure comes from the weaker contribution to the national - state-controlled - economy from tourism since 11 September.

Anger

The price rises come as little surprise, rumours about the plans having circulated for days.

But the lack of detail sparked anger on Cuban streets.

"People here are furious," one housewife told Reuters.

"Not just because of the price increases, but because the government is not saying more and we do not know what to buy before Monday."