Russian consumer sentiment increased for the second consecutive month in July after hitting a record low in May, although it still remains well below the levels seen at the start of the year prior to the annexation of Crimea.
The MNI Russia Consumer Indicator rose 2.0 points on the month to 91.1 in July from 89.1 in June. Consumer sentiment has fallen over the past year given the significant weakening in economic growth and has been dented severely since the onset of the Ukraine crisis, with confidence now standing 8.4% below the level seen a year earlier.
Consumers in July felt significantly better about their current economic circumstances, although remained downbeat on the future outlook for the economy. Current Personal Finances increased sharply in July to the highest since February, with respondents reporting that it was a good time to purchase big ticket items.
Optimism is expected to be short-lived with expectations for future Personal Finances hitting a series low and respondents remaining pessimistic about the outlook for business.
Moreover, consumers’ views on the outlook for employment languished close to the series’ low and inflation expectations, while slightly lower, remained at elevated levels.
Commenting on the latest survey, Philip Uglow, Chief Economist of MNI Indicators said, “Consumer sentiment has recovered somewhat from the low seen in May, although pessimists still outnumber optimists in most of the key variables in the survey.”
“The pick-up in sentiment follows the rise seen in the MNI Russia Business Indicator in July, although both readings came before Malaysia Airlines flight MH17 was downed over Ukraine. The subsequent escalation in sanctions from the US, and especially the EU, will over time have a detrimental impact on the Russian economy which is already close to recession.”
