Economy shrinks, salaries drop
Spending power among Russians is dramatically reduced as salaries fall and inflation hikes.
Figures from Patchwork Barents show that the salary level in the Russian north in 2014 declined, the first drop since the 2008-2009 financial crisis.
The figures, based on data from the Russian Statistical Service, show a similar drop in all the five Barents Russian federal subjects. In Murmansk Oblast, the average annual salary level dropped from $15,160 in 2013 to $13,400 in 2014. In the Republic of Karelia, salaries fell from $10,360 to $9160, while the oil-rich Nenets AO had a drop from $23,280 to $20,870.
The salary decrease comes on the backdrop of the overall setback in the Russian economy. In 2014, Russian GDP growth was reduced to a modest 0,6 percent.
In 2015, the economy is falling into a recession, which is believed to last into 2016. That is likely to bring the salary level further down.
Meanwhile, Russians are struggling to cope with a higher consumer price level. In January, inflation on consumer goods in the region exceeded four percent, and the price hike was most significant on key foodstuff like vegetables, fish, meat and rice.
Figures for February and March do show a stabilized price growth level. Still, prices remain significantly higher than only few months ago.
The result for the average Russian is a tough reduction of spending power. That subsequently has major consequences for the service sector of the economy. Restaurants, cultural institutions, the tourism industry and others are all feeling the pain as people drop evenings out and holidays abroad.
The Russian economic downturn has however not yet resulted in a hike in unemployment. Like in the rest of the country, unemployment in Barents Russia in 2014 was at a historical low.
