Russia consumer sentiment recovered slightly in December due to a surge in willingness to purchase big-ticket items fuelled in part by the upcoming holiday season but also by some panic buying from consumers fearful that the purchasing power of the rouble was being eroded.
The MNI Russia Consumer Indicator rose by 4.2% on the month to 79.8 in December from a series low of 76.6 in November. Consumer sentiment has fallen sharply since the onset of the Ukraine crisis with confidence now standing 16.6% below the level seen a year earlier. The December survey ended before the central bank’s decision to hike rates sharply in December in response to the plunge in the currency.
Three out of the five components which make up the Consumer Indicator improved in December, with the fall in sentiment led by households’ willingness to purchase large household items. With growing concerns about the stability of the economy, rising inflation and the plunge in the rouble there was evidence of consumers buying big-ticket items rather than see the value of their savings erode.
Moreover, a greater proportion of respondents considered it to be a good time to invest in real estate with consumers preferring bricks and mortar to the bank. Expectations for house prices reached the highest level in the survey’s history.
The standoff between Russia and the West continued to weigh down on our panel’s perception of the current business environment, with sentiment falling to a series low in December. There was, however, some improvement in the short-term outlook for business conditions although it remained very weak.
Inflation expectations hit a record high as consumers saw little end to ever spiralling prices.
Commenting on the latest survey, Philip Uglow, Chief Economist of MNI Indicators said, “Consumer sentiment might have picked up a little in December, but over the year as a whole it’s fallen sharply. Confidence remains at a very low level and recent events suggest this month’s pick-up could be shortlived.”
FTSE Mondo Visione Exchanges Index:
MNI Russia CSI Recovers To 79.8 - Willingness To Purchase Big-Ticket Items Masks Weakness
Date 12/01/2015