Russian consumer sentiment recovered slightly after hitting a record low in May, helped by increased optimism for purchasing household goods and a moderate recovery in consumers’ expectations for business conditions.
The MNI Russia Consumer Indicator rose 2.2% to 89.1 in June from 87.2 in May. This was the first gain in five months, although sentiment was still 9.6% below the level seen a year earlier given the significant weakening in growth and the ramifications of Russia’s military action in Crimea.
All five components which make up the Consumer Indicator increased apart from Expected Personal Finances which fell to a series low.
High prices were a serious concern among consumers as dissatisfaction with the current level of prices increased sharply in June, while expectations for inflation rose to a series high. To make matters worse, consumers’ expectations for the interest rate on car and home loans in the coming 12 months hit a record high in June.
Commenting on the latest survey, Philip Uglow, Chief Economist of MNI Indicators said, “The small recovery in consumer sentiment following four consecutive monthly falls to a record low in May is welcomed, although it’s too early to judge if we’ve reached the bottom. While some slightly brighter spots can be found in recent economic data, overall the economic backdrop remains gloomy.”
“The Russian central bank’s plans to tame inflation have been de-railed so far this year by the sharp devaluation in the rouble. Critical to getting on top of inflation is anchoring expectations, but our survey shows inflation expectations are at their highest since the survey started in early 2013, making governor Nabiullina’s job even more difficult.”