Features of Recession Recovering: Income and Inflation

The authors assume that key shocks for downturns in Russia are external shocks with falling oil export incomes. Primary shock occurred as falling incomes of oil companies that reduced their orders in other sectors of the economy; meanwhile the decrease in government revenues transferred shocks deep into the economic processes within the public sector. The crisis expanded through the economy as a whole and reduced economic activity within several quarters of the year. In a few months this process was complicated further by additional factors of the sharp ruble devaluation and inflation. This paper studies the development of inflationary processes in Russia during recession of 2014-2016. The authors note that the external shock caused an outbreak of inflation. The increase in nominal wages overtook the inflation and caused an important income stabilization effect only after the exhaustion of the devaluation shock and CPI slowdown in 2016. But in practice, pension benefits (other social payments and 'hidden' wages) had much slower growth rates, so real incomes in 2016 fell even harder than in previous years. The article's structure is as follows: current inflation; inflation by commodity; producer prices; CPI international comparison; dynamics and structure of household incomes; inequality dynamics of recession recovering.