Consumer spending in Russia

The main articles are:

• Consumption in Russia
• Russian economy

For 2022 in Russia, the consumer economy is concentrated with a significant advantage in retail trade. Retail trade is 3.3 times more than the service sector of the population (38.1 trillion compared to 11.5 trillion), and in the United States it is half as much, that is, the gap/imbalance is 6-7 times.

Retail

Main article: Retail trade in Russia

2024: Consumer demand in Russia in February set a record for the first time since 2014

Retail sales in February 2024 increased by 12.3% over the year, services added 6.4%, and total consumer demand (retail sales + services excluding catering) increased by 10.5%. The effect of the 2023 base affects here, however, the trend for demand growth appeared in December 2022.

Retail sales have been most vulnerable since March 2022 for many reasons: undermining purchasing power due to the devaluation of the ruble (over 70% of the commodity segment outside food - imports), the savings consumption model (largely due to the shock after the outbreak of the conflict in Ukraine and related processes) and narrowing commodity nomenclature due to sanctions and undermining supplies from Europe.

Despite all exogenous and endogenous factors limiting the potential for demand, in February 2024 retail sales were 2.7% higher than in February 22, 9.3% higher than in the last dock month (Feb. 20) and 4.5% higher than in the last month before the Crimean spring (Feb. 14).

In terms of the moving amount for 12 months, retail sales have not yet reached their maximum, but at the moment (comparison of the February level) the current level of retail sales is the maximum in history.

Services were 9.2 per cent above two years ago, 16.9 per cent above Feb.20 and 25.2 per cent above Feb.14. Rosstat notes a parabolic increase in IT services - 88% YoY, fitness centers and sports clubs - 12.1% YoY, courier services - 40.5% YoY, cultural, tourist services and hotels - 10-11% YoY.

Consumer demand in aggregate was 5% higher than Feb. 22, 10.8% higher than Feb. 20 and 9.8% higher than Feb. 14. Yes, it may seem that in 10 years progress is insignificant (less than 1% of growth), but consumer demand tried three times to exceed the level of 2014 (Feb. 20, Feb. 22, 4Q23) and only in February 2024 it was possible, and with a breakthrough.

Source: Spydell Finance

With the elimination of the seasonal effect at the beginning of the year, there is an acceleration of growth in all key commodity groups and types of services. The rigidity of the DCP of the Bank of Russia does not affect demand in any way, everything determines the pace of salaries and budget payments.

2023: Consumer spending rises again

For the first half of 2023, consumer demand in Russia increased by 2.3% YoY, compared to 1P 2021, an increase of 1.2%, compared to 1P 2019, an increase of 5.5%, and over 9 years (1P 2014) symbolic growth by only 0.8%.

In fact, we are talking about a 10-year stagnation of consumer demand and this is taking into account official inflation. For comparison, from 2000 to 2008, consumer demand tripled against the background of growing total incomes of the population.

2022: The volume of paid services to the population amid the conflict in Ukraine remains stable

The service sector against the background of the conflict in Ukraine in 2022 is generally stable - an increase of about zero. For April-November 2022, an increase of 1.4%, which is quite good. 2022 levels are comparable to 2019, 5.4% higher than 2014 and 10% higher than 2008.

Spydell Finance data for November 2022

The stability of the service sector is due to several factors - inflationary emissions were quite limited, with the exception of foreign tourism and air tickets, therefore, with the growth of nominal salaries, the purchasing power of the service sector remained at a high level.

The second factor is the localization of the service sector in Russia throughout almost the entire range.

2020: Decline in consumer spending in Russia by 9% (record decline in 5 years)

The expenses of Russians in 2020 fell at a record high rate over the past 5 years - by 9% compared to 2019. This is evidenced by the data of the audit and consulting network FinExpertiza.

According to experts, the average monthly spending of citizens of the Russian Federation in 2020 amounted to 26,900 rubles. The Russians have moderated their expenses by 1.68 thousand rubles a month, or by 20.2 thousand rubles for the whole year, TASS reports the Russian Information Agency with reference to the FinExpertiza study.

Total consumer spending in Russia at the end of 2020 decreased by about 2.77 trillion rubles. Analysts called the reasons for the reduction a drop in disposable income and quarantine restrictions, which led to a forced decrease in spending on food and leisure outside the home, transport, services, etc.

The largest drop in consumer spending was recorded in the Sverdlovsk region. There they decreased by 13.7%, to 29,700 rubles a month. In Moscow, the figure decreased by 13.2%, to 50,300 rubles. At the same time, two regions recorded an increase in expenses: by 0.3% in Chukotka (up to 31,870 rubles) and by 0.2% in Kalmykia (up to 11,700 rubles).

Residents of the Leningrad Region (by 0.3%, taking into account inflation, to 26.7 thousand rubles), Khakassia (-0.8%, to 20.78 thousand rubles), Altai Republic (-1.2%, to 14.74 thousand rubles) and Chelyabinsk region (-1.3%, to 19.6 thousand rubles).

With rare exceptions, consumer spending was reduced by residents of more prosperous regions, and it remained unchanged in the poor, where people could not afford to spend even less. FinExpertiza President Elena Trubnikova explained that anti-crisis social payments allowed low-income citizens to maintain minimal consumption amid rising prices, which led to a slight increase in costs.^[1]

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