* Russia's GDP contracts 8.8 percent in Jan y/y - EconMin
* Blames fall in industry output, building, consumer demand
* Many sectors see double-digit output, sales declines (Recasts with ministry's data, comments, background)
MOSCOW, Feb 24 (Reuters) - Russia's economy shrank 8.8 percent in year-on-year terms in January, making it one of the worst months on record as turmoil in everything from industry to retail pushed the oil-rich country towards recession.
In its official estimates, the economy ministry said the global downturn was filtering deeper into the real economy and had begun to weigh heavily on ordinary citizens.
"Among the negative consequences of the deepening crisis, we can now count a notable drop in the population's real income growth (6.7 percent), increasing unemployment and, as a result, falling consumer demand," the ministry said.
"The most important reasons for the economic fall of January 2009 is the significant fall in industrial production, the decline in investment activity, a drop in construction and slowing consumer demand," it added.
Contributing to last month's 16 percent year-on-year fall in industrial output, metals firms cut production by 30 percent on lower global demand, while heavy machinery, transport and chemical firms cut output, mainly on lower demand at home.
Gas production also fell by a tenth as Russia was unable to export gas to Europe for most of January because of its pricing dispute with Ukraine. Due to the relatively warm winter weather, European customers also asked for smaller volumes.
Economy Minister Elvira Nabiullina said last week the economy had contracted 2.4 percent in month-on-month terms in January.
It is likely to continue contracting through the first quarter, she said, raising questions as to whether gross domestic product might fall more than the official estimate of a 2.2 percent decline.
"If you have a 16 percent contraction in industrial output, what do you want from the rest of the economy?" said Yevgeny Nadorshin, of Trust Bank. He added that he expected more optimistic quarterly data.
Among the hardest-hit segments, the ministry cited fertiliser producers, which cut output by 42 percent, while tyre producers reduced their output to almost zero.
Car production also fell, by 80 percent, and the ministry cited lack of cheap car loans amid a general decline of personal income and excessive production in 2008.
Retail sales and agriculture remained rare areas which were still growing -- at 2.4 percent and 2.6 percent respectively -- although they were down sharply from impressive growth rates in previous years.
Exports fell more than 40 percent to $20.2 billion as the country exported less oil and gas at lower prices.
Imports fell by a third to $10.3 billion as a 35 percent rouble devaluation, which continued throughout January, started hitting importers. Consumers of heavy machinery reduced purchases of foreign equipment by 47 percent and food and chemical imports fell by 25 and 29 percent, respectively.
The devaluation, coupled with a steep increase in prices, contributed to a 2.4 percent jump in consumer prices in January. (Reporting by Gleb Bryanski, writing by Dmitry Zhdannikov and Simon Shuster; Editing by Dan Grebler)