Consumption tailored for the poor – Newspaper Kommersant No. 69 (7514) dated 04/20/2023

The Central Bank published an analytical note “Russian Household Finance in 2022” based on the results of additional analysis of data from last year’s household survey on consumer finance (see “Kommersant” dated April 3). From the document, in particular, it follows that the median expenses in the group of 10% of families with the lowest incomes amounted to 9.7 thousand rubles. (income – 8.5 thousand rubles), and in the group of 10% of households with the highest income – 39.8 thousand rubles. (income – 57.6 thousand rubles), in families with children they were below the median for the population as a whole (16.1 thousand and 18.3 thousand rubles), and in families of pensioners – 10% higher. In villages, the median per capita expenditure is 14.5 thousand rubles, in cities up to 500 thousand people it is 19% higher, in large cities, except for Moscow and St. Petersburg, by 39%, and in the capitals – by 79% .

In the first six income decile groups, food and utilities traditionally outnumber other expenditures (see chart). At the same time, as noted in the Central Bank, it was the poorest part of the population in 2022 that was the main driving force behind consumption – however, on credit and due to inflated inflationary expectations due to financial illiteracy. The authors of the note estimate that 32% of households in the sample have higher spending than income. “In the first decile group in terms of per capita cash income, this is typical for most households, and the median amount of their expenses exceeds the amount of income. Also in this group, there is the largest spread in the ratio of expenses to income, which indicates the heterogeneity of the behavior of the low-income group,” analysts note.

It is noteworthy that consumption of the poorest people was stimulated not only by financial illiteracy and an attempt to increase consumption on credit. “A feature of the situation is the positive indirect social effect of the structural component of inflation: food prices, which play a decisive role in the consumption of the poor, are now growing much more slowly than inflation, which makes it possible to maintain (with the same scale of indexation) the standard of living of the “poorest”,” indicate CMACP analysts. The Poor’s Basket is an adjusted index of prices for a minimum set of products (without animal oil, alcohol and “other food products”), medicines, synthetic detergents, housing and communal services (excluding hotels) and transport.

Artem Chugunov