Russia consumer sentiment fell to a record low in October as stubbornly high inflation and the weak rouble made households more pessimistic about the future than ever before.
The MNI Russia Consumer Indicator fell by 5.4% on the month to 80.7 in October from 85.3 in September. Consumer sentiment has fallen sharply since the onset of the Ukraine crisis with confidence now standing 18.8% below the level seen a year earlier.
Four out of the five components which make up the Consumer Indicator declined on the month, with the fall in sentiment led by Business Conditions in Five Years. With Russia’s standoff with the West continuing, consumers downgraded their expectations of just how much the economy’s long-term prospects will be dented.
The only component to rise on the month was Current Personal Finances, although it remained at a low level. The increase came in spite of consumers’ dissatisfaction with the current level of prices rising to the highest on record, as the Russian food ban and record low rouble pushed inflation to the highest level since July 2011.
Nevertheless, more consumers considered it a good time to buy a car in the next 12 months following the introduction of a government car scrappage scheme, although the Car Purchase Indicator remained firmly in contraction pointing towards a continuation in the slump of the automobile industry.
Commenting on the latest survey, Philip Uglow, Chief Economist of MNI Indicators said, “The weak rouble, high inflation and economic sanctions weighed heavily on consumer sentiment in October, making consumers more pessimistic than ever before. There is nothing in the survey nor other recent data and events to suggest that this will change significantly anytime soon.”
“While the decision by Russia’s central bank to hike the key interest rate to 9.5% could help to rein in spiralling inflation and stem the slide in the rouble, it will also further restrict growth, potentially tipping the spluttering economy into recession. With the currency still under pressure there’s every possibility we’ll see further monetary tightening over the coming months.”
FTSE Mondo Visione Exchanges Index:
Russia Consumer Sentiment At Record Low - MNI Russia Consumer Indicator Falls By 4.6 Points To 80.7 In October
Date 10/11/2014