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Inequality Is Key to Making Sense of Russian Consumer Plight

  • Record drop in retail sales shows disconnect from rising wages
  • Gains in wealth benefiting top earners as poverty rate spikes
An employee prepares a luxury sable fur coat for display at the Sardaana fur store in Yakutsk, Russia, on Monday, Feb. 15, 2016. Siberian furs are traded around the world.
Photographer: Andrey Rudakov/Bloomberg
Updated on

Russian consumer numbers don’t add up.

A record slide in retail sales for 18 months has been immune to gains in employment and wages, improving confidence and inflation at less than half last year’s level. Widening wealth disparity may be the key to the unprecedented collapse in demand, according to Alfa Bank and VTB Capital.