MNI Russia Consumer Sentiment Indicator: Russia Consumer Sentiment Declines In October - Bleakest Expectations Since Survey Began In March 2013

Confidence among Russian consumers fell further into negative territory in October as concerns about the outlook for business intensified and as expectations for the job market sank to a new record low.

The MNI Russia Consumer Sentiment Indicator fell 0.8% on the month to 69.5 in October from 70.0 in September, only slightly above the record low outturn of 69.2 in March. Four of the five components of the MNI Russia Consumer Sentiment Indicator declined between September and October, led by a scaling back in respondents’ expectations for business conditions in five years.

While consumers were more-or-less unchanged in their assessment of their current financial situation, which remains close to the all-time low, they were increasingly pessimistic about the future state of their finances. A record proportion of our panel anticipated that the employment situation would worsen over the coming year.

Nearly all 1,000 respondents reported that they were spending at least 70% of their disposable income. High inflation has continued to erode take home pay and consumers this month said that they were the most dissatisfied on record with the current cost of living. Households saw no relief over the coming year either, with inflationary expectations remaining elevated. 

With households struggling to balance their finances, the Durable Buying Conditions indicator, a measure of whether it is a good or bad time to purchase a large household good, hit a record low this month. Car purchase sentiment also fell to the lowest level in the survey’s history on the back of heightened expectations for gasoline prices over the coming year.

Commenting on the latest survey, Philip Uglow, Chief Economist of MNI Indicators said, “Consumer sentiment remains at a very low level following the sharp decline seen over the past two years. While there have been some signs of stabilisation this year, the October data exhibits further weakness, with a particularly sharp fall in the outlook for the job market suggesting there will be no quick turnaround.”

“A more accommodative monetary policy stance may offer some relief to consumers, although the continued high level of inflation expectations cautions against cutting too aggressively. Moreover, the increasing likelihood of Fed rate lift-off could tie the central bank’s hands, at least in the short-term.”

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