Moscow Wealth Eaten Up by Inflation

(Kommersant)-Sep. 15, 2008-For the first time in recent years, real income of the population went down in Moscow and in four other regions of Russia. According to official statistics, Moscow had the drop of 1.6 percent in the first half-year.
The indicators that Russia’s Statistics Committee (Rosstat) released late past week revealed the slowdown in the pace of the real monetary income of the population – the growth rates went down from 11.4 percent a year ago to 9.3 percent in the first half of 2008. In some regions, including Moscow, the inflation-adjusted revenues shed 1.6 percent.

Anyway, monetary revenues in Moscow are still amid the highest in the country (34,000 ruble a month vs 13,600 ruble on average).Inflation is evidently the key reason of the slowdown (and reduction in revenues in Moscow and the Leningrad region), most of the analysts say. But inflation isn’t the sole factor that drives down the income of Moscow residents.

According to Rosstat, the Moscow inflation is in line with Russia’s average – 8.6 percent vs 8.7 percent in the first half of this year. “The revenues show material deflation. But Rosstat counts income via the balance of revenues and costs of the population and calculating it correctly isn’t easy,” said Irina Denisova, who is the leading economist at the Center for Economic and Financial Research and Development.

Amid difficulties of Rosstat calculating methods is evaluating monetary revenues via the costs. “The costs are the factor of more accurate monitoring than the revenues. But for Rosstat, the issue how to evaluate income through costs is very comprehensive. The thing is that not only the Muscovites but also residents of the Moscow region are spending in Moscow,” said Alexander Kiruta, director of Interdepartmental Social and Economic Survey Center of Russian Academy of Science. Besides, the Muscovites are the frequent travellers tending to spend more and more money abroad.

In other words, the Rosstat statistics couldn’t be regarded as a solid evidence of the end in the growth in revenues in Russia and in Moscow. But the risk exists and respective probability is going up, particularly given the capital outflow and some negative signs in the foreign trade.