1/5 of Russians can barely buy food

The index of consumer confidence in Russia has simply sunk below the levels observed during the financial crisis, almost one fifth (18%) of Russians earn enough to buy food and other necessities.

photo: REUTERS / Eduard Kornienko

The Nielsen Consumer Confidence Index fell by seven points in the first quarter of 2015 to 72 points, and the recession in Russia and high consumer price inflation undermined optimism about the future.

If you put this number in perspective, in the first quarter of 2009, the global financial system, which was in free fall after the collapse of Lehman Brothers, did not fall below 75.

Even during the worst of the Great Recession, only 4,7% of surveyed Russians said they had enough money only for the basics. The current figure is more than three times higher than this level.

And the rest of the statistics for the Russian domestic economy are equally gloomy reading.

According to Rosstat, the country's official statistical office, total net income has fallen for the fifth month in a row, shrinking at an annual rate of 1,8% in March. This follows falls of 1.6% in February and 0.8% for 2014 as a whole.

The figures clearly show who really bore the brunt of the recent downturn in Russia. While the country's banks and state-owned enterprises were the recipients of billions of dollars of anti-crisis cash, the country's citizens had to shoulder the burden of galloping inflation (currently about 17%), the lack of Western food imports, and the stagnation of the domestic economy.

According to the Russian business news website RBC, 55% of Russians are currently forced to save on clothes, 48% say that they are cutting back on the money they have planned for vacations.

The Central Bank of Russia has repeatedly emphasized the importance of focusing attention on the weaknesses of the domestic economy in recent months. He pointed to weak labor productivity, low levels of investment and declining consumer demand as reasons for concern.

The question now is whether the Kremlin has the desire or ability to correct the situation. After all, the fall in the price of oil could be temporary, but the faith of its citizens in their future prosperity is something that Russia desperately needs if it wants to succeed in diversifying its economy away from the export of raw materials.

Based on: businessinsider.com