The Analytical Center's estimates of inequality in household consumption suggest some rather remarkable changes both in the consumption pattern and consumption trends for various income groups. It should be noted that in 2018, according to the Federal Statistics Service, the Russian households, for the first time ever, spent more than they earned (100.7% of income), thus setting a new dubious record.
For the First Time the Households Spend More on Current Consumption than They Earn
"As the number of state scholarships in Russian universities has decreased and the cost of education has increased over the past five years, the number of Russian students choosing to study abroad has gone up," noted Victoria Pavlushina, Deputy Head of the Department of Macroeconomic Studies of the Analytical Center in an interview for the Kommersant.
The share of education expenses in the total spending of the unprovided families in 2013-2018 demonstrated sustained growth while the better-off families consistently decrease their education spendings, the Kommersant writes. One explanation for this trend, according to Ms Pavlushina, is the fact that the random survey of household budgets that the Federal Statistics Service uses in its studies does not account for the spending on education abroad, an option mainly utilized by the well-to-do households. However, the increase in spending on education in the total spending of the less wealthy households is due to the fact that people do not want to axe it away even as the price goes up, opting instead to cut their spending in other areas.
According to the Analytical Center estimates the share of groceries in the household spending went up from 28.5% in 2014 to 30.1% in 2018 even as the share of alcohol in total grocery spending kept decreasing year on year, going from 1.7% to 1.5% respectively.
The same period saw the household spending on the items other than food and beverages shrink from 40.1% to 36.5% of total spending, while spending on services went up from 26.3% to 28.7% of the total: the former case is a result of the continued decline in real household income (by 11% over the past five years) while the latter case stems from the increased spending on bank loans and taxes.
However, the analysts note that the consolidated figures hide a very high level of social inequality. Thus, based on 20% distribution referred to by the Federal Statistics Service, the share of food stuffs purchased for consumption at home went from 43% in Q3 2013 to 48% in Q3 2018 for 20% of less wealthy households. In the same period, for 20% of most well-to-do households the share of food consumption in total spending practically didn't change remaining at a little over 20%. Between Q3 2013 and Q3 2018, the share of spending on food for home cooking was growing in all the 20-percent income groups except the fifth one, while the share of spending on eating out dropped most of all in the fourth income group (in the distribution of the Federal Statistics Service, this group represents the so called middle class) that was hit the hardest by the crisis, while this indicator remains unchanged for the groups from 1 to 3.
Purchases of non-food items had the opposite trend. The share of items other than food fell the most in the total spending of the most affluent households. In the fifth group it went down from 47% to 41% while in the fourth group it went down from 36% to 33%. The share of spending on non-food items only grew among the poorest 20%: from 27% to 29%. This is quite remarkable: less wealthy people look toward purchasing durable goods when their income increases. However, the trends in the amount of unsecured loans issued to households over the past two years would suggest that in Russia people simply take out more loans to buy durable goods.
Source: The Kommersant
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