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Russian consumer sentiment plummeted to an alltime low in August following the downing of Malaysia Airlines flight MH17, the imposition of Tier 3 sectoral sanctions and the retaliatory Russian food ban.
The MNI Russia Consumer Indicator fell 9.4 points on the month to 81.7 in August from 91.1 in July. Consumer sentiment has fallen sharply over the past year given the significant weakening in economic growth and the onset of the Ukraine crisis, with confidence now standing 18.2% below the level seen a year earlier.
All five components which make up the Consumer Indicator fell between July and August. The sharpest fall was in the Durable Buying Conditions Indicator, which plunged by 21.5 points as consumers did not view it as a good time to make big ticket purchases given the pressure on household finances.
Moreover, consumers’ dissatisfaction with the current level of prices rose to the highest on record and their inflation expectations remained elevated after a ban on food imports by Russia.
Consumers felt that the business situation was likely to worsen further over the coming year, with Business Conditions in a Year falling to the lowest level on record. Longer-term expectations for business conditions also declined in August, but remained the strongest component of the MNI Russia Consumer Indicator.
Commenting on the latest survey, Philip Uglow, Chief Economist of MNI Indicators said, “This was the first survey since both the EU and US imposed tougher sanctions and the downing of a Malaysia Airlines plane, and shows consumers growing increasingly concerned about both the outlook for the economy and their own household finances.”
“While support for President Putin has increased to the most in years since Crimea was annexed, our survey shows that consumers are growing increasingly dissatisfied, which in the medium term could prove a vote loser rather than winner.”
