Russian real income drops by 6.3% in January

By bne IntelliNews February 19, 2016

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.

Related Articles

Russia's Sberbank selling its Ukrainian subsidiary

Russia’s largest bank Sberbank is selling its subsidiary in Ukraine to a consortium of investors that includes Latvia’s Norvik Bank and a private Belarusian company, Sberbank said in a statement ... more

Russia’s central bank reduces key rate in surprise decision

The Central Bank of Russia (CBR) reduced the key lending rate by 0.25 percentage points to 9.75% on March 24, despite broad market expectations of no change this month. The ruble strengthened to a ... more

Ex-Trump aide Manafort reported to be long-term Putin lobbyist

Paul Manafort, US President Donald Trump's former election campaign manager, struck a covert deal with Kremlin-affiliated Russian oligarch Oleg Deripaska in 2006 to promote the interests of President ... more

Register here to continue reading this article and 2 more for free or purchase 12 months full website access including the bne Magazine for just $119/year.

Already a subscriber or registered - click here to recover access.

If you a IntelliNews Pro user - click here to login.

Thank you. Please complete your registration by confirming your email address.
A confirmation email has been sent to the email address you provided.

To continue viewing our content you need to complete the registration process.

Please look for an email that was sent to with the subject line "Confirmation bne IntelliNews access". This email will have instructions on how to complete registration process. Please check in your "Junk" folder in case this communication was misdirected in your email system.

Already a subscriber or registered - click here to recover access.

If you a IntelliNews Pro user - click here to login.

If you have any questions please contact us at sales@intellinews.com

Subscribe to bne IntelliNews website and magazine

Subscribe to bne IntelliNews website and monthly magazine, the leading source of business, economic and financial news and commentary in emerging markets.

Your subscription includes:
  • Full access to the bne content daily news and features on the website
  • Newsletters direct to your mailbox
  • Print and digital subscription to the monthly bne magazine
  • Digital subscription to the weekly bne newspaper

Already a subscriber or registered - click here to recover access.

If you a IntelliNews Pro user - click here to login.

bne IntelliNews
$119 per year

All prices are in US dollars net of applicable taxes.

If you have any questions please contact us at sales@intellinews.com

Register for free to read bne IntelliNews Magazine. You'll receive a free digital subscription.

Already a subscriber or registered - click here to recover access.

If you a IntelliNews Pro user - click here to login.

Thank you. Please complete your registration by confirming your email address.
A confirmation email has been sent to the email address you provided.

IntelliNews Pro offers daily news updates delivered to your inbox and in-depth data reports.
Get the emerging markets newswire that financial professionals trust.

"No day starts for my team without IntelliNews Pro" — UBS

Thank-you for requesting an IntelliNews Pro trial. Our team will be in contact with you shortly.

Dismiss