Citizens embarked on embezzlement – Newspaper Kommersant No. 36 (7481) dated 03/02/2023

Rosstat data confirms a noticeable surge in consumer demand in early 2023. This was driven by a wide range of factors, including record employment growth, a notable rise in real wages and pensions at the end of 2022, and the payment of benefits for children from families with incomes below the subsistence level. The latter, we note, even led to a decrease in income inequality – to a minimum over the past 20 years.

January data from Rosstat confirms a notable jump in consumer demand in the first month of 2023 (see also “Kommersant” dated March 1). The total turnover of retail trade, catering and paid services to the population in annual terms in January decreased by 3.7% after a decrease of 7.2% in December 2022, the Ministry of Economy calculated. The decline in retail turnover slowed to 6.6% from 10.5%, consumption of services increased by 2.3% after 2.5%, and the growth in catering turnover jumped to 13% in annual terms against 7.4% in December.

The Center for Macroeconomic Analysis and Short-Term Forecasting (CMASF) considers the overall decline in consumer spending in January to be close to the estimate of the Ministry of Economy – 3.8% in annual terms. Taking into account seasonality, the indicator in January 2023 compared to December 2022 jumped by 5.5% (minus 0.3% on average per month in the fourth quarter of 2022), the center’s expert Igor Polyakov calculated. This was primarily due to a 10% increase in spending on non-food products (even against the backdrop of weak car sales and a shortage of certain goods in this category), while on average per month in the fourth quarter of 2022, seasonally adjusted consumption of non-food products decreased by 0.9%. . High – 4% – was in January and the increase in demand for food.

Consumer activity in early 2023 was fueled by a whole range of factors — notable pent-up demand in the form of an increase in maximum liquid savings, the depreciation of the ruble and general uncertainty.

In December, real wages rose by 0.6% in December, after rising by 0.3% in annual terms in November 2022 (in October, the figure fell by 1%). Taking into account seasonality, according to the calculations of the CMASF, real wages in December compared to November increased by 4.9% against an average monthly increase of 0.5% in October-November and 0.2% in the third quarter of 2022. In other words, a surge in demand was provided by noticeable pre-New Year payments, an increase in salaries at the very end of the year, indexation of pensions (in real terms, they increased by 4.6% in December 2022 and 2.4% in January 2023), payments to the poor in January, expansion of lending to individuals and record employment over the past four and a half years in January (750 thousand people found work in a month, and unemployment reached a new historical low of 3.6% “against the growing needs of the special operation,” notes Igor Polyakov).

In the long run, the recovery in consumer demand will also be supported by the reduction in inequality, which Rosstat recorded at the end of 2022. The Gini coefficient (showing the degree of income inequality between different groups of the population) decreased from 0.409 in 2021 to 0.402 in 2022 – it was lower only in 2002 (0.397), after which it grew, turning to a decrease only in the mid-2010s years.

From the distribution of incomes of the population by 20 percent presented by Rosstat, the share of the fifth of them (the richest 20%) decreased by 0.7 percentage points (p.p.) over the year, to 46.1% of the total income of the entire population of the country. The share of the fourth group did not change (22.7%), while in the third, second and first quintiles (with the smallest share of income) it increased by 0.2 percentage points each (up to 15.3%, 10.3% and 5. 6% respectively). The distribution of the population by 10 percent groups shows similar dynamics. The income share of the top 10% of households decreased from 30.1% in 2021 to 29.6%, while the share of the bottom 10% rose slightly to 2.1% (2%).

Over the three quarters of 2022, the growth rate of the average per capita cash income of the poorest population was consistently higher than that of the rich, both in nominal and real terms compared to the same period in 2021.

Vice-Rector of the Higher School of Economics Lilia Ovcharova explains this by the appearance of benefits for children from families with incomes below the subsistence minimum – in Russia, as Deputy Prime Minister Tatyana Golikova previously stated, about 10 million families receive them. “It is also likely that income growth could have occurred in the middle segment of the income scale, where business representatives are concentrated, which received additional profit last year due to the reorientation of the population towards domestically produced goods and services,” she believes.

Artem Chugunov, Anastasia Manuylova