Russian Consumer Demand Strengthens in Sign of ResilienceOlga Tanas
Russian consumer spending accelerated in July as unemployment unexpectedly fell and inflation eased to the slowest pace in eight months, boosting household purchasing power.
Retail sales accelerated for a second month, growing 4.3 percent from a year earlier after a 3.5 percent increase in June, the Federal Statistics Service in Moscow said today in an e-mailed statement. The median estimate of 17 economists in a Bloomberg survey was for a 3.7 percent gain. Unemployment fell to 5.3 percent from 5.4 percent, surprising analysts who projected an increase to 5.5 percent.
The slowest inflation since November has bolstered household finances, improving confidence and consumer spending, which accounts for about half of the $1.9 trillion economy. The gains in consumption are offsetting weaker global demand for commodities as the world’s biggest energy exporter is struggling to emerge from the steepest economic slowdown since 2009.
“The retail sales acceleration we expected is the result of slower inflation,” Dmitry Polevoy, chief economist for Russia at ING Groep NV in Moscow, said by e-mail before the data release.
Consumer-price growth decelerated in July to 6.5 percent from a year earlier, compared with 6.9 percent in June and this year’s high of 7.4 percent in May. Inflation is seen as a bigger concern to most Russians than corruption and unemployment, a poll by Sberbank Investment Research showed last week.
The central bank held its main lending rates unchanged for an 11th month on Aug. 9 as policy makers try to hold price growth to this year’s target range of 5 percent to 6 percent.
The improved outlook is extending to retailers including OAO Magnit and X5 Retail Group, the country’s largest grocery chains. Consumer-oriented companies have outperformed Russia’s broader stock index, with Magnit advancing 66 percent this year and smaller rival Dixy Group climbing 14 percent. The Micex Index of 50 stocks is down 6.3 percent in 2013.
Real disposable incomes advanced 4.2 percent in July from a year earlier, exceeding the median estimate of eight economists for a 3.6 percent gain. Fixed-capital investment unexpectedly rose 2.5 percent after shrinking 3.7 percent in June. Analysts polled by Bloomberg forecast a 1.4 percent decrease last month.
The economy unexpectedly slowed in the second quarter, with gross domestic product gaining 1.2 percent from a year earlier, the weakest expansion since growth resumed after a 2009 contraction.
“Good macroeconomic data for July should downplay recession worries,” Alexander Morozov, Moscow-based chief economist for Russia at HSBC Holdings Plc, said in a report. The figures leave room for policy makers to ease monetary policy next month, he said.
GDP will grow “significantly better” in the second half, Economy Minister Alexei Ulyukayev told reporters Aug. 12, adding that he saw no reason to revise the 2.4 percent official forecast.