Cuba caps food prices to tame inflation as more tourists arrive

Tuesday, May 03, 2016

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HAVANA, Cuba (AFP) – Cuba on Tuesday announced price caps on basic vegetables to protect poor families' purchasing power as a rise in tourism to the communist island puts pressure on the food supply.

The price of tomatoes, bananas, sweet potatoes, and 20 other products will be capped to combat inflation, the government said in a statement published in the media.

Government data show the price of farm produce in Cuba rose by 27 per cent in 2014. The rise continued in 2015 and this year, authorities said without giving a figure.

The government blames the price rises on Cuba's low domestic production and what President Raul Castro has called "intermediaries" in the retail market.

Cuba has to import 80 per cent of its food because its domestic farming sector is too small to meet demand.

The number of foreign tourists to the island increased last year as Cuba opened up its foreign relations. Three and half million foreigners visited the island of 11 million inhabitants.

Because there are no wholesale outlets in Cuba, hotels and restaurants compete with individuals to buy food from ordinary retailers. Authorities say that competition drives up prices.

The finance ministry said Tuesday's new price controls offered "protection for the consumer and for farm products, since they ensure price stability."

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