Sentiment among Russian consumers plunged to the lowest level in the survey’s history as consumers recoiled from the higher level of interest rates and the continuing rise in inflation.
The MNI Russia Consumer Indicator fell by 15.4% on the month to 67.5 in January from 79.8 in December. Consumer sentiment, which started tumbling even before the onset of the Ukraine crisis, is now down 32% on the year.
All five components which make up the MNI Russia CSI hit series lows in January and most other supporting indicators from the survey fell to the lowest on record. The drop in sentiment was led by a 20.6% fall in expectations for long-term business conditions as a potent cocktail of higher interest rates, plummeting oil prices, spiralling prices and the standoff with the West continued to take their toll. Expectations for business conditions over the coming year fell less sharply, but were lower in absolute terms.
80% of respondents reported that their financial situation had worsened in January compared with a year ago, the highest level on record. Falling income was the main reason, while a growing proportion pointed to losses stemming from investments, potentially the result of the depreciating rouble.
The high level of inflation is also eating away a large part of household finances. Consumers were the most dissatisfied with the current level of prices since the survey started in March 2013, while the sharp increase in inflation expectations to a record high suggests that inflation will continue to increase.
Commenting on the latest survey, Philip Uglow, Chief Economist of MNI Indicators said, “Confidence fell off a cliff in January as the crisis in Russia reached a new level. This month’s survey was devoid of any bright spots with consumers reeling from the combination of high interest rates and inflation. With the rouble under pressure, oil prices at a low level and no realistic plan of action from the government, our panel of respondents are gloomier than ever before and see no improvement in either the short or long-term.”
“The renewed escalation in fighting in the Ukraine and the possibility of additional sanctions against Russia further threaten the already bleak outlook for economic growth this year.”
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Russian Consumer Sentiment Plummets To An All-Time Low - All Five Components Of MNI Russia CSI Hit Record Low
Date 09/02/2015