In the first month of 2021, the index of “free money” in the budgets of Russians grew sharply – by 82% compared to December 2020. We are talking about an indicator that demonstrates the dynamics of the excess of income over expenses. The index of “free money” (ISD) January-2021 showed the maximum growth in the history of observations, follows from the data of the research holding “Romir”, which Izvestia got acquainted with. The record increase is not at all related to an improvement in welfare, experts say. “Free money” in the budgets of Russians was formed due to the fact that in a period of uncertainty due to a pandemic and a sharp jump in inflation, people prefer not to spend, but to form personal reserves.
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Didn’t use the budget
The coronavirus pandemic has set another record. According to the Romir holding, the ISD has grown to the maximum in the entire history of observations, having increased in January 2021 by 82% compared to December last year and by 22% since January. Moreover, even by January 2019 (the starting point of the index), the growth was 7%. The ISD demonstrates the dynamics of the excess of income over the expenses of Russians, that is, the ability to accumulate funds or spend them on large purchases (equipment, cars, housing) that cannot be purchased, roughly speaking, for one salary.
Photo: RIA Novosti / Maxim Blinov
“Free money” in the context of the study is the funds that remain with the household after purchasing the necessary food, everyday goods, paying for housing and communal services, transport and other services, the holding explained.
Partially such a sharp dynamics of January 2021 to December 2020 can be explained by seasonality. In the first month of the year, ISD is traditionally at its peak – after the pre-New Year consumer rush, citizens are reducing their spending. However, in the new reality, the change was dramatic. So, a year earlier, the growth of ISD in January to December amounted to 40%. In addition, the increase in the index in annual terms is also indicative. This can no longer be explained by seasonality.
“This year, the effect was strengthened by the decreased opportunities for spending on New Year’s holidays due to limitations,” commented on the results of the study, Executive Director of Romir and Mile Group Inna Karaeva.
According to her, it is also important that in 2020 the Russians extended large spending on purchases for the whole year, and did not go through the shops in December.
“This created the preconditions for the formation of new money savings,” Inna Karaeva is sure.
It would seem that a sharp change in the ISD should be perceived positively, but not in an abnormal pandemic period. According to the majority of experts interviewed by Izvestia, the January record is more associated with coronavirus restrictions, and not with an increase in income. Indeed, the latest data from Rosstat indicate that real disposable income fell by 3.5% in 2020.
Photo: RIA Novosti / Sergey Pyatakov
ISD is somewhat similar to this indicator of Rosstat, but more indicative, since it includes expenses for various goods and services (including transport, medical, educational), noted the associate professor of the Department of Mathematical Methods in Economics of the PRUE. G.V. Plekhanov Nikita Moiseev.
“This can help to broaden the understanding of the current economic situation in the country and the dynamics of changes in the structure of population expenditures,” the expert believes.
Everybody in the house
Seasonal fluctuations cannot be the key reason for the sharp increase in “free money” in the hands of Russians, says Dmitry Zhuravlev, a researcher at the Institute of Regional Problems. To some extent, the record can be explained by an increase in the income of certain categories of citizens due to state support measures, he suggested.
– Ultimately, it ends up with the appearance of additional funds both in the pockets of employers and in the pockets of workers. Yes, this increase in income is temporary and extraordinary, but it clearly had an impact on the ISD indicator, – he said.
Other experts interviewed by Izvestia are inclined to attribute the growth of the ISD to a pandemic and related restrictions, as well as a surge in inflation. In January, the annual rate of growth in prices reached 5.2%, which clearly did not contribute to the increase in consumer demand.
– Also, January 2021 turned out to be inactive due to the pandemic, many people canceled New Year’s trips, shopping trips, spent more time at home, and not in cultural institutions, shops and restaurants, – explained Lazar, associate professor of the Department of World Finance at the Financial University under the Government of the Russian Federation. Badalov.
Photo: Izvestia / Kristina Kormilitsyna
Because of the pandemic, people have transferred many of their activities online, and Russians believe that services in this segment should be cheaper than offline, emphasized Yegor Krivosheya, head of the Skolkovo-NES Center for Financial Technologies and Digital Economy Research. According to him, some Russians have switched to a remote mode of work, which makes it possible to reduce spending on meals outside the home and travel by transport.
“Added to this is the continuing uncertainty about the future and falling incomes for a number of people. Therefore, some Russians refuse loans and unnecessary spending that is not related to basic necessities, which also reduces mandatory payments, – said Yegor Krivosheya.
The coronavirus crisis has formed a clear desire in people to form reserves, so they are careful about their expenses and prefer to save, and spend excess money in savings, Lazar Badalov agreed.
The Free Money Index (ISI) is calculated as the difference between household income and the cost of essential goods and services. Average household income is determined on the basis of Romir’s own calculations and Rosstat data. And the costs of the necessary goods and services are based on the data from the Romir Scan Panel.