Russian consumers were slightly less pessimistic in February, although record high inflation expectations and a bleaker outlook for long-term business conditions are likely to weigh on sentiment in the future.
The MNI Russia Consumer Sentiment Indicator rose by 7.3% on the month to 72.5 in February from a series low of 67.5 in January. Even so, consumer sentiment was down 23% on the year following a prolonged downturn which began even before the onset of the Ukraine crisis.
Four of the five components which make up the MNI Russia Consumer Sentiment Indicator improved in February, led by a sharp rise in consumers’ willingness to purchase a large household item. There were also smaller increases in the personal finances measures as well as a significant gain in the outlook for business conditions in one year. Nevertheless, the latter remained sharply down on the year and was in contrast to a further deterioration in the Current Business Conditions Indicator to an all-time low.
Expectations for business conditions over the coming five years also deteriorated to the lowest on record as an increasing proportion of respondents anticipated that the current downturn will have lasting repercussions on Russia’s business environment.
With the downturn in the Russian economy gaining pace, consumers became more pessimistic than ever in their outlook for the job market.
Inflation expectations increased to a record high in February and a record proportion of respondents thought that interest rates would increase further in spite of the January interest rate cut.
Commenting on the latest survey, Philip Uglow, Chief Economist of MNI Indicators said, “While there may have been a bounce in the MNI Russia Consumer Sentiment Indicator, it’s difficult to find much to be positive about. On an absolute level, sentiment remains very weak and the outlook is even worse.”
“The weak outlook for growth calls for a further normalisation in the level of interest rates following December’s mammoth emergency hike. But the surge in inflation expectations observed in recent months and continuing concerns over the rouble suggest that the Central Bank of Russia will take a cautious approach to any easing.”
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MNI Russia Consumer Sentiment Improves In February - Sentiment Still Weak And Employment Outlook At Record Low
Date 11/03/2015