BOFIT Weekly Review 2015/30
Consumption, real incomes and household borrowing in Russia remain down
The seasonally adjusted volume of retail sales in June still remained virtually unchanged and was thus down nearly one tenth from a year earlier. The gradual slowing in the inflation rate since last winter’s price spike slightly helped restrain the drop in real household incomes. In addition, nominal wages, despite the recession, revived in both the private and public sectors. Even so, wages were up 6–7 % y o-y in May-June, while consumer prices were still up 15–16 %.
While households have reined back consumption, their net borrowing has turned negative. Over the past 12 months, the stock of household loans granted by banks has not changed, i.e. households’ loan repayments to banks have equalled their borrowing. Since the start of this year, however, household debt repayments have far outstripped borrowing – in fact to the extent that was seen during the 2009 recession.
Additionally, after the drop at the end of last year, household funds have flowed into banks so strongly that the flow of money from households to banks has exceeded the flow of money from banks to households in an exceptional manner. Households have been increasing their deposits to a remarkable degree by winding down their ruble and forex cash holdings.