Russian Consumer Demand Probably Eased to 4.8% in JanuaryScott Rose and Olga Tanas
Russian consumer demand probably eased last month as inflation sapped household purchasing power.
Retail sales advanced 4.8 percent in January compared with a year earlier, slowing from 5 percent in December, according to the median of 19 forecasts in a Bloomberg survey. Real wages rose 3.3 percent after the weakest increase in more than three years a month earlier, a second survey showed. The Federal Statistics Service in Moscow will publish the data after 4 p.m.
Russia, the world’s largest energy exporter, is counting on the household spending that accounts for about half the economy to maintain growth as Europe’s contraction hurts demand for commodities. The government forecasts consumer-price growth will accelerate again this month, threatening consumer optimism and spending power and keeping pressure on the central bank not to use lower borrowing costs to spur growth.
“We expect consumption to continue steadily trending down,” Elina Ribakova, an economist at Citigroup Inc. in Moscow, said by e-mail. “In the first half of 2012, consumption was boosted by pre-election spending, but since then growth has been slowing.”
Carmakers including Renault SA are facing a slowdown in demand in Russia, Europe’s No. 2 auto market after Germany. Carlsberg A/S, the Danish owner of Russia’s biggest brewer, missed estimates for fourth-quarter earnings after the government increased taxes and regulation on the industry, including a ban on beer sales at kiosks from Jan. 1.
Gross domestic product grew 3.4 percent last year, the weakest since a contraction in 2009. The pace probably slowed to 2.4 percent in the fourth quarter of 2012 from a year earlier, according to a Bloomberg survey.
That’s less than half the 5 percent pace Prime Minister Dmitry Medvedev has said Russia will need to grow. The government has called on Bank Rossii to lower borrowing costs as investment falters, while monetary-policy makers including central bank First Deputy Chairman Alexey Ulyukayev have argued that economic output is already near full potential.
Russia’s central bank may reduce interest rates once inflation slows, though Chairman Sergey Ignatiev told reporters last week he wouldn’t promise it.
Industrial output unexpectedly shrank in January for the first time since 2009. The data on investment, retail sales and wages will be “crucial” in determining whether the industrial production figures were an anomaly, Jacob Nell, chief economist for Russia at Morgan Stanley in Moscow, said by e-mail.
“Following Ignatiev’s words, rates can only come down when inflation comes down, and inflation in February looks likely to be higher than a year ago,” he said, adding that he expects no rate change in March “unless there is a meltdown in growth.”
Fixed-capital investment advanced 0.5 percent from a year earlier after contracting 0.7 percent in December, according to the median estimate of 19 economists in a Bloomberg survey.
The indicator is volatile in Russia because of swings in spending by large state-run companies and the government itself, Vladimir Tikhomirov, chief economist at Moscow-based Otkritie Financial Corp., said by phone.
“Given the investment growth of about 15 percent early last year, there’s no reason to expect a big number in annual terms now,” he said. “Most likely there will be stagnation, and possibly even a drop after last year’s strong data.”
President Vladimir Putin, who returned the Kremlin for a third term last year, told the government to boost investment to 25 percent of GDP by 2015. The figure was 18 percent last year, Finance Minister Anton Siluanov said in an interview last week.
Unemployment probably climbed to 5.7 percent in January from 5.3 percent a month earlier, according to another Bloomberg survey. Disposable incomes probably grew 4.8 percent after a 4.9 percent advance in December.
“We are not expecting any positive turnaround soon because of the higher base last year as well as the poor investment climate,” Juri Kren, an emerging-markets economist at IDEAglobal in London, said by e-mail. “We do see the central bank lowering all key interest rates by 25 basis points to support growth and bowing to political pressure as soon as inflation starts slowing.”