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The central bank of Russia has warned that its ability to steer inflation is at risk from growing wealth inequality and the disappearance of the middle-income households that are the most sensitive to interest rates and prices.  Data due Wednesday will show retail sales dropped in September for a record 21st month, while real disposable incomes tumbled an annual 7 percent, according to the median estimates in Bloomberg surveys.

“The decline of the middle class is bad for control over inflation, because risks from fiscal policy are higher,” said Oleg Kouzmin, a former central bank adviser who’s now chief economist for Russia at Renaissance Capital in Moscow.

Deeper social inequality weakens the price elasticity of demand and complicates the task of controlling inflation, according to the Bank of Russia. Less-well-off families, usually without savings and little access to loans, spend primarily on basic necessities and hardly react at all to changes in interest rates.

Notably the Board of Directors of Russia's Central Bank decided to reduce benchmark from 10.5 to 10 percent on 16 September. At the beginning of this year 4,05 percent inflation was registered in Russia and 6.42 percent was registered per year.