Domestic demand remains weak despite reports of robust real income growth

RUSSIA ECONOMICS - In Brief 31 Oct 2025 by Evgeny Gavrilenkov

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According to Rosstat, total real incomes and real disposable incomes in 9M25 increased y-o-y by 8.0% and 9.2%, respectively. While these figures are preliminary and may undergo slight revisions, the changes are unlikely to be significant. Retail sales, however, rose by only 2.1% in 9M25 and 1.8% in September. Similarly, paid consumer services grew by 2.4% and 2.9% over the same periods. This suggests that consumer demand continues to decline, even with the reported rise in real incomes.Additionally, Rosstat indicated that real wages grew y-o-y by 4.4% in 8M25 and 3.8% in August, reflecting a significant slowdown compared to last year’s growth. Real pensions also increased by a mere 2.2% y-o-y in 9M25.These figures suggest that the gap between the growth of real incomes and the combined growth of real wages and pensions is too significant to overlook. Some time ago, Rosstat stopped publishing demographic and income inequality statistics, making this issue more challenging to analyze. Wages and social benefits (including pensions) are the two largest components of household income. Recently, wages accounted for about 60.0% on average, while social benefits rose to 17.9% in 3Q25, up from below 17.0% in 2024. Income from property has remained relatively stable at around 8.7% of total income. Meanwhile, income from entrepreneurial activities grew from below 6.0% in 1Q24 to 8.0% in 3Q25. The percentage of "other" income sources (6.4%) showed little change in 3Q25 compared to 3Q24. Considering these numbers and assuming social benefits per capita were not the fastest-growing category, it seems likely that income inequality in Russia has increased, which aligns with the overal...