Russian Retail-Sales Growth Probably Slowed on Inflation Pickup

Russian retail-sales growth probably slowed in December as inflation accelerated to the fastest in three months, while wages and investments may have increased the least since September.

Receipts at merchants advanced 4.3 percent from a year earlier, compared with 4.4 percent in November, according to the median estimate of 15 economists in a Bloomberg survey. Wages adjusted for inflation increased 6.8 percent, and investment grew 0.8 percent, separate surveys survey showed. The Moscow- based statistics office will publish the data this week.

Russia, the world’s largest emerging-market economy to raise borrowing costs last year, is struggling to reverse a slowing economy as accelerating inflation and a cooling job market damp consumption. The weaker demand may embolden the government’s push for lower borrowing costs, which is being resisted by the central bank.

“The fourth quarter was weak and the first quarter risks being even weaker as slowing domestic demand and a high base effect in the first half of 2012 will be key headwinds for GDP growth,” Dmitry Polevoy, a Moscow-based analyst at ING Groep NV (INGA), said by e-mail. “We think the central bank will stay on hold in the coming months despite mounting pressure from various government officials and bankers.”

Economic growth slowed to 2.4 percent in the fourth quarter compared with the same period a year earlier, the weakest pace since the start of a post-recession recovery in 2010, according to the median estimate of 15 economists in a Bloomberg survey.

‘Huge Argument’

Expansion may accelerate to 3.7 percent this year from 3.6 percent in 2012, with the risk of an abrupt end to “rapid” retail-lending growth, the International Monetary Fund said yesterday.

The central bank is resisting calls to cut interest rates, sparking a “huge argument” with the government over priorities, First Deputy Prime Minister Igor Shuvalov said in a Jan. 18 interview. The government has been increasingly vocal in its debate with Bank Rossii, with Finance Minister Anton Siluanov and Deputy Economy Minister Andrei Klepach arguing for easier credit last week.

Easing monetary policy with lower rates would be “counterproductive” and “likely to produce new imbalances, new risks for different segments of the economy,” central bank First Deputy Chairman Alexei Ulyukayev said Jan. 16 in comments at the same economic forum where Siluanov and Klepach spoke.

‘Prudential Measures’

Loans to households advanced 39.3 percent last year, while banking assets grew 18.9 percent and retail deposits increased 19.9 percent, Bank Rossii First Deputy Chairman Alexei Simanovsky said on Jan. 17.

“In response to the emerging risk of overheating in retail lending, the central bank should stand ready to implement further prudential measures as needed, in addition to those recently announced,” the IMF said.

Inflation quickened to 6.6 percent in December, matching the highest level since November 2011 after bad harvests from the U.S. to Russia drove up food costs and delayed utility-price increases took effect.

Car sales in rose 21 percent last year to $71 billion, PricewaterhouseCoopers said on Jan. 22. Growth may slow to 3 percent annually in 2014-2017, it forecast.

‘Less Concerned’

“Last year, people became less concerned about the crisis and their job security, and secondly, banks were willing to offer loans to the population,” Vladimir Tikhomirov, the chief economist at Otkritie Financial Corp., said by phone from Moscow yesterday. “Retail loans could grow 15 to 20 percent this year which is basically half of the level seen last year. On retail sales, I forecast growth of 3.5 percent to 4 percent.”

Real wages probably increased 6.8 percent from a year earlier, slowing from 7.3 percent the previous month, according to the median estimate of nine analysts in a Bloomberg survey. Disposable incomes also grew more slowly, rising 4.5 percent compared with 6.7 percent, another survey showed.

The unemployment rate may have risen to 5.6 percent, the highest in eight months, from 5.4 percent in November, according to the median estimate of 13 economists polled by Bloomberg. The increase was mainly due to seasonal reasons, Alexander Morozov, chief economist for Russia at HSBC Holdings Plc (HSBA) in Moscow, said in an e-mail.

“This weakness will likely spread into 2013, at least the first half, for reasons including somewhat faster inflation, moderation of consumer retail growth and weaker consumer confidence,” Morozov said.

To contact the reporter on this story: Ott Ummelas in Tallinn at oummelas@bloomberg.net

To contact the editor responsible for this story: Balazs Penz at bpenz@bloomberg.net

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