Russian real disposable incomes fall for ninth month in row

Russian real disposable incomes fall for ninth month in row
Russian real incomes down 6.9% in February
By bne IntelliNews March 22, 2016

Russian real disposable income fall accelerated in February falling by 6.9% m/m compared with a contraction of 6.3% in January.

Incomes fell by only 0.7% in December, but that was largely due to employers paying holiday bonuses for the festive season. Russians' real incomes have been falling steadily in 2015 and were down on average by 4% for the year compared with 2014. The worst month in 2015 was May when they fell by 7.3% m/m.

However, in ruble terms nominal incomes are still rising and were up 0.5% in February to RUB28,161 ($415 at current exchange rates) per month, reports the state statistics office Rosstat, which is still less than half the pre-crisis level in dollar terms.

Nominal average monthly salaries have also increased over the last year to RUB32,990 ($486) per month, up 5.9%, which is still less than the 12.9% inflation rate for 2015 as well as less as the slower pace of inflation of 7.9% in February so incomes will fall again this year, albeit at a slower pace.

Falling inflation is easing the pressure on consumers as February's decline in incomes was the slowest rate of decline in more than a year.

"This could be a sign of a gradual reversal of the downward trend of the salary that was formed during 2015", it was noted in the monitoring of the current situation in the economy, published by Ministry of Economy in late February.

At the same time, the number of Russians living below the poverty level of RUB9,452 ($139.5) increased by 20% to 19.2mn people, or 13.4% of the population.

Still this is higher than the US official poverty level of 17.9% and the rates of poverty in Portugal, Spain and Greece, according to the OECD's estimates. However, these poverty numbers are not directly comparable due to the differences in the dollar value of the subsistence line and the implicit judgment of what is the minimum acceptable quality of life below which one is considered to be in poverty.