Real wages grew by a handsome 6.5% y/y in January, according to preliminary Rosstat data just as the economy starts to cool, but it also brings down inflation.

Rosstat reported that the average monthly nominal wage was RUB88,981 ($1,056), marking a 17.1% rise in nominal terms compared to the same period in the previous year, TASS reports.

The nominal wage gain is due to a chronic labour shortage and running well ahead of inflation which is currently just under 10% resulting in strong gains in real wages. The real wage growth of 6.5% means after accounting for inflation, the purchasing power of Russian workers has improved, albeit at a more modest rate.​

At the same time the economy is clearly slowing. Russia’s annual GDP growth in February stands at 0.8%, down from 3% in January, the Economics ministry said, TASS reports. But the ministry noted that the overall dynamics of key macroeconomic indicators in February were largely influenced by the calendar factor, as February 2025 had one fewer day than February 2024.

However, the latest PMI manufacturing and services results also show a sharp slowdown in the first quarter of this year. Both indicators are stuck at around the 50 no-change benchmark level.

But for the wage outlook that could be good news as the Central Bank of Russia (CBR) is trying to engineer a soft landing for the overheated economy using non-monetary policy methods which appears to be working.

The S&P Global PMI panellists also reported that inflation pressures are falling due to the cooling business environment. Given the shortage of labour, companies are unlikely to fire workers and if inflation falls that will offset any slowdown to some degree by boosting the value of real wages. It remains unclear how well this process will be managed, but it has started.

Nevertheless, peak inflation has not passed yet, even thought the latest FOM survey found that inflation expectations in the population are starting to fall. Annual inflation in Russia accelerated to 10.24% in March, according to the Russian Economy Ministry. Prices changed by 0.05% in the non-food segment but prices continued going down for electric and domestic appliances. The PMI panelists also reported a fall in price pressures, but not a reversal.