The authorities promised an increase in pensions by about RUR 1,000 ($15) to an average level of RUR15,000 ($226) per month in 2019, and to RUR 25,000 ($377) under further pension strategy development program. However, in reality, this growth is highly unlikely; the indexation will not even cover the rise in prices for basic goods for pensioners (and other citizens) goods, Director of the Institute of Contemporary Economy Nikita Isayev estimated.
As Invest Foresight reported, many pensioners did not even notice the increase in their benefits after the New Year. The authorities explained that the old-age insurance-based pension increased by RUR 1,000 per month on average across Russia, but the increment was calculated individually for each pensioner. To be entitled to the average increase of RUR 1,000, the person should have had monthly benefits of RUR 14,100 ($213) before the change, which is not the case of all senior citizens in Russia. For example, with a minimum pension of RUR 7,044 ($106), which is how much pensioners in the Kursk Region are paid, the increase will be RUR 528 ($8), Isayev notes. The actual increase will be 7.05%, which is indeed more than the official inflation rate of 4.3% per annum.
“For the pensioner’s expenses to increase by these 4.3%, they must consume all the goods and services for which inflation is calculated equally: buy all sorts of foods, including caviar and champagne, various clothes, cars, and vacations,” the expert explains.
However, the retirees’ consumer basket is based on staples, a segment where the price dynamics are completely different. According to Rosstat, sugar went up by 28.3% year-on-year; cucumbers, by 37.2%, tomatoes, by 22.5%, cabbage, by 20%, potatoes, by 9.9%, onions, by 9.5 %, and meat and poultry, by 9.7%. This means 7.05% will not help offset the real increase in prices. Moreover, this year the increase in the value of the most important goods may be even faster due to the VAT hike, the acceleration of official inflation to 5.5%, the weakening ruble and other economic problems, Isayev warns.