Income of Russians: some have less and less, others have nowhere to put their savings

Ekaterina MaximovaAccording to Rosstat's preliminary estimate, according to the results of the first three quarters of 2022, the real disposable income of the population decreased to 98.3% (against 104.3% in 2021).

Nominal wages showed an increase (112.7%), but real wages decreased (98.7%). And the fall began in April last year (March 103.1%; April 92.8%, etc.).

According to the Institute of National Economic Forecasting of the Russian Academy of Sciences (INP RAS), household consumption showed -5.5% (+9.5% by the end of 2021). The savings of Russians, according to the INP RAS, have grown to 2.9 trillion rubles (2.4 trillion rubles in 2021). "As a result of rising prices and a decrease in real incomes of the population, a situation has formed in which the more affluent part of the population has formed an additional amount of savings, and the less affluent part has a shortage of funds for other than primary expenses," explains the quarterly forecast of the INP RAS.

Leonid Kornilov, Chairman of the Board of Directors of Finbridge Holding, adds that the largest part of the loss of income fell on the so-called middle class. And for citizens with low incomes, the losses were partially compensated by the state.

As Elena Kiseleva, an analyst at the Institute for Integrated Strategic Studies (ICSI), noted, ordinary people, as a rule, are not concerned about such issues as the reduction of GDP per capita and other economic indicators.

"A much more understandable and meaningful indicator for them is the change in their personal or family income, and what can be bought with this money, taking into account inflation. In other words, it makes sense to look at the dynamics of real disposable income," Kiselyova stressed.

She recalled that the Ministry of Economic Development predicted a reduction in real disposable incomes of Russians by 2.2% by the end of 2022. But this meager is deceptive.

"At first glance, the drop is not very big. However, the problem is that steady income growth has not been observed in the country for a long time (in fact, since 2014). Therefore, if we take 2013 as a base, the current drop in real disposable income reaches 7.8%," the ICSI analyst estimated.

"And I won't write anything out. I will save money"A catch phrase from a Soviet cartoon became the slogan of 2022.

Russians have thoroughly revised their spending.

"The reduction in real incomes leads to a decrease in consumption, especially for non-food products. In general, according to Rosstat, retail turnover in January-October 2022 decreased by 5.9% year–on–year in comparable prices, including for food - by 0.9%, for non-food products - by 10.2%. The data from Sberindex for November-December also indicated a depressed state of consumer demand, despite the New Year period," Kiseleva estimated.

In addition, the ICSI expert adds, consumer activity is negatively affected by the withdrawal from the market of foreign manufacturers and retail chains that have already become familiar. The range and quality of goods has become worse. "People are waiting and using old stocks. Or they generally prefer to save now rather than consume because of the high uncertainty in the economy and other spheres of life," Kiselyova said..

Kornilov agrees: "In 2022 it became more difficult to earn and keep what you earned. Some have lost their main source of income, while others have lost their incomes, and they have gone into austerity mode, but almost everyone has become more reasonable about their expenses. Opportunities for investing money are decreasing, and the rate of their depreciation is increasing. Rates on bank deposits have stopped covering inflation. To work in the stock market, you need a certain financial literacy. Moreover, in a crisis, the risk of losing money on the stock market always increases."

He emphasizes that the decline in consumption of citizens can become a serious factor of stagnation for the economy next year.

"And so far there are no obvious incentives for the growth of domestic consumer demand. For small and medium-sized businesses that have actively entered the import substitution race, this may mean difficulties with scaling up the business and repayment of borrowed funds," Kornilov believes.

Getting poorer slowlyAs economic geographer Natalia Zubarevich wrote in her tg channel, Russians will continue to get poorer in 2023.

"We will not get poorer so quickly this year. And gradual impoverishment is perceived by people not so painfully. They look at the prices in the store - if the growth is not so strong (the state will take care of it), then everything is fine," Natalia Zubarevich said.

Elena Kiseleva recalls that in 2023 the authorities promise a small recovery of real disposable income.

"So, the forecast of the Ministry of Economic Development includes growth of 1.6%, which, however, will not cover the recession of 2022 and, moreover, will not change the long-term stagnation of income. Most likely, real incomes will grow next year due to lower inflation, and not due to economic growth and the emergence of a significant number of high-performance jobs," the expert concluded.