MNI Russia Consumer Sentiment Indicator: Russia Consumer Sentiment Rises In August - Oil Price Decline Threatens To Push Confidence

Confidence among Russian households rose in August following last month’s sharp reversal in consumer sentiment, although it is barely off the lows witnessed in March.
 
The MNI Russia Consumer Sentiment Indicator rose 2.5% on the month to 72.5 in August from 70.8 in July. Confidence had picked up noticeably since March to a six-month high of 76.4 in June, but most of these gains were wiped out by the fall in July.
 
Looking ahead the major concern is that the fall in oil and other commodity prices, which came soon after the August survey period ended, will bear down on sentiment potentially pushing it to new lows. Since the start of the survey in 2013, the fortunes of Russian households have been tightly linked to those of the oil price.
 
Four of the five components of the MNI Russia Consumer Sentiment Indicator increased on the month with the rise led by Current Personal Finances and Business Conditions in One Year. Smaller increases were seen in Durable Buying Conditions as well as the longer five year outlook for business conditions. The only component to decline this month, albeit slightly, was expectations for personal finances in one year. 
 
The small uptick in overall sentiment since February has been matched by an improvement in attitudes towards the real estate market. Home buying sentiment rose in August and is now 6% up from the start of the year, although remains weak in absolute terms, while expectations for prices remain at an elevated level.
 
Commenting on the latest survey, Philip Uglow, Chief Economist of MNI Indicators said, “In spite of this month’s rise in consumer confidence there is little to cheer. Sentiment is down nearly 30% from the more positive tone seen two years ago, with the majority of respondents holding a negative view.”
 
“Inflation expectations fell slightly in August but remain at a high level. This, coupled with the resurgence in consumer price inflation and the weak rouble, suggests the CBR will have to refrain from cutting rates at the upcoming September 11 meeting.”

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