Page 40 - RPTRusFeb17

14.6% in the middle of this year.
Nominal wages have started to recover as the fallout from the rapid collapse of oil prices at the end of 2014 fades. Real wages dropped by over 10% in the latter part of 2015 as inflation soared, but since the start of this year they recovered and even briefly turned positive in February and March (rising 0.6%, 1.5% respectively).
What has done the real damage to the well being of the population is the far sharper fall in real disposable income, which was falling by 6.3% at the start of this year and remained at about that level all year before shrinking sharply in August, down by 8.3%, the latest data available. This has feed through into retail sales which have been contracting by over 5% a month all year. Real disposable income is being driven down by high food inflation; food inflation is taking up a larger share of household spending.
All this has impacted bne IntelliNews “despair index”, a shorthand index that adds together poverty, inflation and unemployment to give an indication of what is like for people in the bottom third of society. The baseline for the index is a theoretical 6 (no poverty, 4% residual unemployment, 2% residual inflation); the best score of any country in the last 20 years was France with 6.1 in 2001, but since then scores of 25-30 are typical.
While Russian income is falling, it is not falling very fast so the overall despair index in Russia has actually improved this year quite substantially.
Russia’s despair index reached a peak of 33.7 in September 2015 a nd was elevated at about the same level for all of 2015. But thanks to the rapid fall in inflation this year, the index has followed CPI down and was only 26.2 in September – its lowest level this year.
40 RUSSIA Country Report February 2017 www.intellinews.com