14.06.22 Review

By end of year personal incomes could fall by 7–12%, purchase of durable goods will decline and savings will become less attractive

In the first quarter of 2022 personal incomes in Russia fell by 1.2%. This decline will continue in the upcoming months and by the end of the year, if the government does not introduce any compensatory measures, may reach 7–12%, economists of the Development Center at the Higher School of Economics say, summarizing the estimates of a number of think tanks.

Such a decrease, along with a reduction in the variety of imported goods and foods will cause a change in consumer behavior — Russians will aim to not cut the quality of food they purchase, rather limit buying durable goods.

Expected high inflation rate will reduce the attractiveness of savings. This will result in redistribution of expenditures in favor of various home improvement expenses and consumption of cheaper services (fast food, entertainment, etc.) so these markets should expect an increase in demand.