By the end of the year, higher prices of food and reduced incomes will have led to Russian households spending more than half of their total incomes on food, analytics in VTB Kapital says to Vedomosti.
The share of income that the average Russian family spends on food has risen steadily from 25% in 2007 to 36% in 2013, but made a jump in the last months of 2014.
This development is far more serious than in the crisis years of 2008-2009, the analytics say.
According to the analytics, Russia passed the peak of food inflation in February, and the exchange rates will begin to stabilize in the second quarter. They predict that food prices will go up no more than 9.6% in 2015, but this will still have a huge impact on Russians’ distribution of expenses, as real incomes are expected to go down 8% in course of the year. Only in January real incomes fell by 8%.
Russians have already started to cut back on spending. According to the Federal Statistics Service, retail turnover in Russia declined in January by 4.4% year on year – for the first time since the crisis in 2009. Sales of food products fell by 5.5%, non-food products by 3.5%.
In the Russian part of the Barents Region, consumer prices on all commodities increased, in average, with four percent in January 2015, as numbers from Patchwork Barents show.
Russians spending less aboard
Russians spent 50% less on shopping abroad in January 2015 compared to the same period in 2014, numbers from Global Blue show. For the whole of 2014, Russian travelers’ spending fell by almost 17% compared to 2013. Despite this dip, Russians remains among the top-five spenders in the tax-free system. Russians are on second place after the Chinese, and stand for 10% of all transactions worldwide.
