Rising poverty levels due to a decline in real income are increasingly forcing Russians to go without non-essential goods. Experts do not see any potential for improvement in the situation in the near future.
The number of poor Russians who had begun economizing on goods and services had increased to 89%. Source: Alexander Ryumin/TASS
As real incomes continue to contract in Russia amid an ongoing economic slump, spending on foodstuffs is taking up a larger and larger part of the average citizen’s budget.
In February 2016, for the first time in eight years, food and alcohol, along with tobacco products, were the main part (50.1 percent) of Russia's retail turnover.
The statistic was published in the monthly monitoring report of the population's social-economic situation and wellbeing prepared by the Institute of Social Analysis and Forecasts at the Russian Presidential Academy of National Economy and Public Administration.
The previous "record" was set in May 2009, when the share of food products reached 49.6 percent of retail turnover.
"Currently there is growth in the population's spending on food, which logically reflects the fact that real income has decreased and poverty has increased. It is known that the poorer the household, the higher the part of the budget that it spends on food," say the report's authors.
The institute calculated that in February 2016 Russians' real income in comparison to the same period in 2015 had declined by 6.9 percent and real salaries had declined by 2.6 percent. The poverty level by the end of 2015 had increased by 2.2 percent to 13.4 percent.
According to the monitoring report, 50 percent of the population have experienced a decrease in living standards, which has consequently resulted in a reduction of consumer activity. Both low-income and medium-income classes have begun to economize.
By March 2016 the number of poor Russians who had begun economizing on goods and services had increased to 89 percent and the number of people from the middle class who were cutting back their spending had grown to 79.3 percent.
Of the Russians surveyed, 55.8 percent said that they were ready to cut out non-essential goods they were used to buying.
"Besides buying food, Russians must make monthly payments to cover their debts, mortgages and other financial commitments. In such cases the majority of Russians either stop buying cars, expensive electronics, furniture, etc., or don’t buy them at all," said Natalya Kolupayeva, a senior analyst at Raiffeisen Bank.
According to the report by the Institute of Social Analysis and Forecasts, people are mostly pessimistic in their evaluation of the economic situation: "The light at the end of the tunnel is moving farther away."
In the words of one of the report's authors, Maria Ivanova, in the course of the year the share of Russians' budgets occupied by food products may increase.
"The reasons will be the same: The continuing reduction of the population's real income and consequently, priority consumption of essential goods,” she said.