Poverty risks increase

The World Bank forecasts that by the end of 2016, the number of impoverished Russians will grow by 1 million and will reach 20.3 million people.

Thus, the proportion of the poor in the Russian population will amount to 14.2%. The report also notes that in 2015, the poverty rate increased from 11.2% to 13.4%, i.e. rose by 3.1 million people. The total number of the poor at the beginning of 2016 amounted to 19.2 million people. The growth in the share of poor people is due to inflation and the reduction of real disposable income.

In the face of rising prices and decreasing purchasing power of disposable incomes, the risks of poverty rise. The increase in the share of savings in 2015 due to the most prosperous social groups together with the increase in the country poverty rate suggests that the gap between the least and the most affluent segments of the population will grow.

Real disposable cash incomes of the population (incomes minus obligatory payments, normalized by consumer price index) declined in January 2016 compared to the same period of 2015 by 6.3%, and real wages fell by 6.1%.

In general, compared to the previous year, real disposable cash incomes of the population decreased in 2015 by 4.0%, real wages — by 9.5%, and the real size of pension benefits — by 3.8%.

In accordance with the Russian Government Decree № 178 from March 10, 2016, the subsistence minimum for the 4th quarter of 2015 was reduced by 2.3% compared to the previous quarter. The reduction of the minimum subsistence level was due to the decrease in prices for certain types of foods that make up the market basket — for example, potatoes and some other vegetables — in the 4th quarter of 2015.

The drop of the minimum subsistence level can lead to the lowering of poverty rate calculated by Rosstat. At the same time, the population’s own assessment of their financial standing in 2016 is likely to continue to deteriorate. According to Rosstat, the share of people who rated their current financial situation as “bad” or “very bad” in the 4th quarter of 2015 amounted to 30.2%, up 4.2 percentage points compared to the same period last year.

Elena Grishina — senior research fellow at the Budgetary Policy Department