The share of Russians who consider themselves middle class has dropped to 51% (from 61% in 2014). In absolute terms, the middle class could fall to 14 million people, according to Sberbank CIB
Over the past two years the middle class in Russia could fall by 14 million people, according to the “Consumer index Ivanova” from Sberbank CIB for the third quarter of 2016. This estimate was obtained based on how the people themselves identificeret yourself. A survey by Sberbank CIB held among 2.3 million of Russians with average income at the age of 18 to 65 in 164 cities with the population more than 100 thousand people. The index is named for, which is the most widespread in Russia, it is produced on a quarterly basis and to trace the level of consumer confidence of the middle class.
Why is lost the middle class?
In the study of the middle class is measured by level of income (level of education and so is not considered). In this case respondents are given the opportunity to classify themselves to a particular class.
A threshold level of wages required to ensure that a person was considered to be middle class by income, has grown over the two years by 18%, from 31 thousand to 37 thousand. (third quarter of 2016 to the third quarter of 2014). These levels are determined based on the average earnings of respondents who identify themselves as middle class. Nominal wages in Russia during the same period grew by only 10%, follows from the data of Rosstat. This explains the decline of the middle class in the index definition Ivanov.
The proportion of respondents who identificeret themselves as middle class dropped from 61% of the population to 51% during the two crisis years, according to a review of Sberbank CIB. These people went from middle class with less income. Since the sample of the study involves a population of 74 million urban residents, a decline of 7.4 million people. If we extrapolate the result, and for the rest of the population of Russia, it turns out that the reduction will be even more — 14 million people, analysts write Sberbank CIB.
Nevertheless, the authors of the index believe that the middle class continue to decline will not be because nominal wages will grow in line with inflation. This year inflation may be less than 5.8 percent, said today the Minister of economic development Alexei Ulyukayev, the Ministry of Finance for the next year provides a forecast of 4%.
What scared the middle class?
Overall, the consumer confidence index in the last survey has increased, though in the negative zone. Now he is minus 15% according to the third quarter of 2016, as against minus 17% in the previous quarter. The confidence of the middle class increased, due to wage growth, weakening inflation expectations and concerns related to the ruble exchange rate, and improvement in the labor market.
However, inflation and corruption remain the greatest risks from the point of view of the respondents. Unemployment is in third place, but the number of those who fears decreased. According to the survey, the unemployment rate among respondents was reduced to 10.9% compared with 11.3% in the second quarter. 7% working “Ivanov” noted that their employers hire new staff (the same as it was in the second quarter of 2016).
Disappointment in discounts
According to the survey, the average salary of survey participants in the third quarter of 2016 amounted to 33 063 rubles, it increased by 8.2% compared to the same period of 2015. A large part of the respondents income is spent on food (38%), two other major areas of spending is utilities (16%) and clothing (10%). With the beginning of the year a quarter of respondents said that this year wages have been increased or indexed. When you increase wages, “Ivanov” suggest to defer 12% of the increase. In the third quarter, ivanovy began to defer: the share of monthly earnings, deferred savings, rose to 7.4 from 6.7%.
The proportion of consumers who decide to purchase based on the price is still high, down only 1 percentage point compared with the second quarter of 2016, up to 76%. At the same time consumers have less to hunt for discounts. The proportion of those who visit shops just for promotions decreased by 3 percentage points compared with the second quarter of 2016, when their number reached a historic high of 47%. This trend, however, is not so much the welfare of “Ivanov” as the disappointment in the promotions.
The consumer became less sensitive to these proposals once all the retailers have started to arrange them equally often, said General Director of “INFOLine-Analytics” Mikhail Burmistrov. In the end, according to the survey, buyers have the impression that retailers began to hold less stock and higher prices. This should improve the profitability of retailers in the third quarter of 2016, the analysts at Sberbank CIB. About the price increase of the question, mind Burmistrov. But retailers really started to pay more attention to the quality of goods and range rather than to increase the share of the sales.