Russian disposable income falls in second quarter as economic data paints bleak outlook

A pedestrian walks past the windows of commercial premises rented out in Moscow, Russia June 8, 2022. REUTERS/Evgenia Novozhenina/File Photo

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MOSCOW, July 27 (Reuters) – Real disposable income in Russia fell 0.8% in the second quarter of 2022, preliminary data showed on Wednesday, as rising prices and conflict-related curbs in Ukraine stifled government power. purchase from the Russians.

Industrial production fell 1.8% year on year in June, a steeper decline than in May, and retail sales continued to fall, down 9.6% from June 2021. As the previous month, unemployment was the outlier, along with the unemployed. rate fluctuating at a record level of 3.9%.

The Russian economy is sinking into recession and inflation is still near its highest level in 10 years after Russia sent tens of thousands of troops to Ukraine on February 24, triggering Western sanctions.

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Data from the Rosstat statistical service showed that industrial production continued to fall. Auto production has fallen 89% in annual terms, one of the industries hardest hit by Western sanctions aimed at punishing Russia for its actions in Ukraine.

But the number of unemployed in Russia remained at 3.9% of the labor force in June, its lowest since the statistics service began publishing the figure in 1992, according to the Eikon database.

A drop in real disposable income is a sensitive topic for the Kremlin, with rising prices hitting living standards. For years, President Vladimir Putin has promised to increase real disposable income, a measure of people’s purchasing power.

Retail sales, a gauge of consumer demand that is Russia’s main economic growth engine, fell 9.6% in June after falling 10.1% in May. Analysts had expected an 8.7% drop from the year-ago period in the Reuters poll.

Low-cost chain Fix Price on Wednesday became the latest retailer to note that consumers are focusing on more essential purchases as uncertainty limits impulse purchases.

Rosstat also said real wages in Russia fell 6.1% year-on-year in May after falling 7.2% the previous month. Analysts polled by Reuters had expected real wages, adjusted for inflation, to fall 4.4% in May.

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