A slump in Russian wages accelerated more than forecast, crippling retail sales and underscoring the risk that the latest bout of ruble weakness will deepen the biggest drop in domestic demand under President Vladimir Putin.
Wages adjusted for inflation plummeted 9.2 percent from a year earlier in July after a revised 8.6 percent decline in the previous month, the Federal Statistics Service in Moscow said Wednesday in a statement. That was more than the 7.5 percent median of 17 estimates in a Bloomberg survey. Retail sales fell 9.2 percent, slumping for a seventh month.
The consumer gloom leaves the economy increasingly vulnerable after oil, Russia’s main export earner, tumbled more than 30 percent since June. That’s sent the ruble on a 25 percent nosedive in the past three months, the worst performance globally, sowing concerns that the currency collapse will reignite inflation and further erode purchasing power.
“Domestic demand and investment are constrained by still fairly tight monetary policy,” Piotr Matys, a London-based foreign-exchange strategist at Rabobank, said by e-mail before the data release. “I can’t see domestic demand and investment improving significantly in the coming months.”
The ruble was little changed at 65.8060 to the dollar as of 3:41 p.m. in Moscow after declining for four days. The 10-stock Micex Consumer Goods & Services Index was up 0.4 percent.
Real disposable incomes slipped 2 percent from a year earlier, the statistics service said. The unemployment rate unexpectedly fell to 5.3 percent from 5.4 percent in June. The median estimate of 18 economists was for an increase to 5.5 percent.
Fixed-capital investment declined for a 19th month, dropping 8.5 percent in July, the most since 2009. That was worse than the median estimate for a 7.7 percent decline in a Bloomberg survey.
Gross domestic product shrank 4.6 percent from a year earlier in the second quarter after a 2.2 percent drop in the previous three months. The central bank has said that it may worsen its forecast for a 3.2 percent contraction this year. Inflation soared to a 13-year high in March before slowing to 15.6 percent in July.
“Because a renewed fall in oil prices over the past month has caused the ruble to weaken again, there is a growing risk that the worst of the recession is still ahead,” Moody’s Investors Service said in a report.