Russian's real income took a sharp step down in January, falling by 6.3% y/y to an average nominal wage of RUB32,100 a month ($421.37) – about the half the peak reached in the boom years – according to the Rosstat state stistics agency.

The latest result comes on the back of other bad news. The dollar value of the economy has also halved to just over $1 trillion, down from its peak of $2.1 trillion in 2013. And unemployment, which has been at record lows for years, has started to tick up slowly, was  short of the 6% line for the first time since 2013 in January (5.8%).

Real incomes were falling for all of 2015, with the pace accelerating in the last months of the year. Russia started 2015 with a mild contraction of 0.7% in real wages in January y/y, but it was not until the autumn that the decline grew to -5.4% in November and 5.6% in October. Wages had a boost in December as the holidays approached and only declined by 0.7% that month, but now everyone is back to work clearly employers have gone back to squeezing their payroll bill.

The decline in Russians' real spending power was multiplied in the country's retail turnover, which declined even faster in the darker months, ending the year with a 15.3% dive in December (although sales bounced back somewhat in January after falling only 7.3%, according to the official statistics).

Overall, real incomes fell by an average of  4% in 2015, compared to a 1% fall the year before.

The question now is will the declines continue, and if so will they accelerate? One other piece of new macro-data gives some cause for optimism: annualised inflation fell sharply in January from 12.9% in December to 9.8% in January. According to Sberbank CIB, it was down again in the first two weeks of February to under 9% and falling inflation – a main concern of the man on the street – will bolster the spending power of his ruble and ease the pressure on household budgets.

The majority of Russians (53%) believe the biggest threat Russia faces now is rising prices and the impoverishment of broad layers of the population, according to a recent poll by the independent Levada Center.

Most Russians (82%) agree with the view that there is a full-blown economic crisis in the country, and one in five (21%) believes that it will last for many years.

The Central Bank of Russia (CBR) was targeting 4% inflation for this year in December but that target now looks unrealistic, although inflation is expected to fall further this year. The forecast for economic growth has also been cut from 0.7% of growth in 2016 to a 1.4% contraction.