Real incomes of the population are declining, but costs are increasing

4 july 2019

Analytical Center experts analyzed the regional dynamics of real income and demand for goods for 2017–2018 and January–May 2019. The results were included in the June newsletter on current trends in the Russian economy.

According to the study, the growth of consumer spending in most regions comes against the real income decline. Russians continue to increase consumption through savings and loans. "The continuing growth of wages has a positive impact on consumer confidence," the authors of the Newsletter write. However, the high level of inter-regional inequality persists. Thus, the highest level of income is observed in the financial and economic centers and regions with resource-based economy, and the lowest is in the agricultural and agro-industrial regions of the country.

According to the Newsletter, in 2018, the level of nominal average monthly wages in Russia as a whole amounted to 43.7 thousand rubles. Since last year, the ratio of the maximum and minimum wages remains at 73–75 thousand rubles.

The authors of the study noted that the real income of the population in 2018 increased in 38 regions. The largest growth occurred in Sevastopol. Retail sales increased in almost all regions. Crimea, Adygea and Moscow region are among the leaders in the growth rate of retail sales.

In addition, experts note that at the end of 2018, the share of saved income of the population reached 3.7%, which is the minimum value for the last 10 years. The debt of individuals on loans as of January 1, 2019 amounted to 14.8 trillion rubles, which is 22.6% higher than in 2017.

At the same time, according to Bank of Russia estimates, an increase in interest payments on loans is not the main reason for the decline in disposable income. The regulator determines the acceleration of inflation in early 2019 and the slowdown in the growth of nominal incomes as priority factors.  The Bank of Russia also notes that despite the growth of lending, the debt burden of Russian households is at a moderate level and is comparable with developed and developing countries.

Read more in the Newsletter "Consumer Demand: Regional Disparities".

Other newsletters on current trends in the Russian economy can be found here.