Russia’s Widening Wealth Divide Poses Risks to Central Bank
- Currency crisis, recession hurting living standards in Russia
- Central bank warns smaller middle class complicates its policy
A Russian national flag flies from the roof of Russia's central bank.
Photographer: Andrey Rudakov/BloombergThis article is for subscribers only.
The Bank of Russia is discovering yet another downside to how little is left of the country’s middle class.
The central bank has warned that its ability to steer inflation is at risk from growing wealth inequality and the disappearance of the middle-income households that are the most sensitive to interest rates and prices. Earnings and domestic demand are still withering at a pace unprecedented under President Vladimir Putin. Retail sales dropped in September for a record 21st month, while real disposable incomes fell an annual 2.8 percent, the Federal Statistics Service in Moscow said on Wednesday.