MNI Russia Consumer Sentiment Falls To 72.8 In May - Improvement In Outlook For Finances, Inflation And Jobs

The MNI Russia Consumer Sentiment Indicator remained broadly stable at 72.8 in May compared with 73.0 in April. Though consumer sentiment was down 17.7% on the year, our survey provides a tentative sign that we have reached a trough in confidence as some measures in our survey appear to have stabilised following January’s sharp setback. In particular, consumers are less pessimistic about their current financial situation than they were at the start of the year, while their expectations for business conditions in five years’ time have recovered the ground lost from January’s drop.
 
In May, three of the five components that make up the MNI Russia Consumer Sentiment Indicator declined. While all components were below 100, meaning pessimists outnumbered optimists, consumers revised up their future expectations. Expected Personal Finances was the biggest contributor to consumer sentiment, increasing 3.3% to 73.2 in May. Consumers were also slightly less pessimistic in their outlook for long-term business conditions with the Expectations for Business Conditions in Five Years Indicator rising to a five-month high.
 
The survey provided further evidence that inflation looks to have peaked and has started to ease following the recent appreciation of the rouble. Fewer consumers also expected prices to rise over the next year.
 
With the CBR signalling that it is seeking to normalise monetary policy following the sharp hikes in interest rates in late 2014, slightly fewer consumers expected interest rates to rise over the coming 12 months. The Interest Rate Expectations Indicator eased to a five-month low of 150.9 in May.
 
Consumers were also slightly more upbeat about job prospects. The Employment Outlook Indicator, which gauges opinion on the outlook for the employment market over the next 12 months, improved to 70.1 in May from 68.8 in April, the highest since December.
 
Commenting on the latest survey, Philip Uglow, Chief Economist of MNI Indicators said, “Russian consumer confidence remains at a low level, although sentiment has stabilised since the start of the year. While increased optimism about the future could signal a rise in wider confidence ahead, the weakness in the economy means that household finances remain under significant pressure.”

MNI Russia Consumer Report