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What about the income and expenses of Russians in July


Last month we released a note ( about how things are going with the income and expenses of the population – let’s see how the situation has changed.

Consumer demand remains weak

Food spending continued to rise at double-digit y/y rates in July, while growth slowed m/m, reflecting a deflationary trend. On average, the growth in spending on food products in July amounted to 15.3% y/y against an increase of 17.4% y/y in June. Inflation at the end of July in annual terms amounted to 15.3% against 15.9% in June and 17.1% in May.

Consumption of non-essential goods is still restrained. Spending on non-food items in the last week of July returned to negative dynamics (-5% y/y against +0.4% y/y on average in July and -2.8% y/y on average in June). On average, spending on household appliances and electronics decreased by 19% in July against a 20% decline in June, and on clothing and footwear – by 37% y/y against a 35% y/y decrease in June.

Expenditure on services continued to demonstrate positive dynamics – on average, growth amounted to 13.2% in July against growth of 13.5% in June. It is worth noting here that service spending sank to a much greater extent during the pandemic than goods spending: the growth we see, according to Sberindex, shows to the low base of last year, when service spending has not yet recovered to pre-Covid levels.

Let’s see what happens to income:

  • According to Rosstat, the decline in real incomes of the population in the 2nd quarter. 2022 amounted to 1.9% against a decrease of 1% in Q1. 2022
  • The latest monthly data for May show a 6.1% y/y decline in real wages against a 7.2% y/y decline in April, which is comparable to the 2014-2016 data. For pensions, data for June is available: in nominal terms, the growth was 16.4% y/y, while in real terms (adjusted for inflation), pensions increased by only 0.4% y/y.
  • The main factor supporting the dynamics of income in Q2. 2022 – social. payments, which showed a 20% YoY growth in Q2. 2022 (their share in the structure of household income increased by 0.9 p.p. to 21.2%). At the same time, wages in nominal terms increased by only 11% yoy (the share in total income decreased by 1.7 percentage points to 56.5%).

The deflationary trend continues

From July 23 to August 1, the decrease in CPI (consumer price index) amounted to 0.14% y / y against a decrease of 0.08% and 0.17% in the previous two weeks. In annual terms, inflation as of July 31 was 15.3% against 15.9% in June and 17.1% in May. For 2022, the consensus of the Central Bank lowered the inflation forecast from 17% to 15%.

The continuation of the deflationary trend in July is associated with a strong ruble and weak consumer demand. As a result, after a sharp surge in prices in March on the strength of the dollar and the expectation of a shortage, prices are correcting, as people are reserved about purchases, and the strengthening of the ruble allows you to buy imported goods cheaper.

In our service ( you can read more about how all these factors affect the business of retailers and which of the players should bet on.

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Oxford graduate with honors. He worked in large financial projects for well-known Wall Street corporations. After he earned his first capital and a reputation as a successful trader, he opened his own company. At the moment, the growth of the company's capital is 20% per year.
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