By Andrei Skvarsky.
MNI Indicators, an intelligence unit of Deutsche Boerse, says consumer sentiment in Russia hit its lowest point last month since the firm launched its monthly surveys of it in March 2013.
MNI Indicators’ measuring system showed consumer sentiment to be “down 22.6% on the year following a prolonged downturn which began even before the onset of the Ukraine crisis”, the London-based intelligence company said in a report, expressing suspicion that the Russian economy contracted in the first quarter of the year.
The MNI Russia Consumer Sentiment Indicator, an index based on monthly polls of ordinary Russians by MNI Indicators, fell to 69.2 in March from 73.1 in February – levels below 100 represent the predominance of negative over positive answers.
Outlooks for general business conditions in Russia in five years’ time were the only section of the survey where the respondents were slightly more upbeat than in February.
But overall they were still pessimistic about the future of the economy because of higher interest rates, plummeting oil prices, domestic inflation and the standoff with the West.
There was slightly less concern about inflation, which MNI Indicators interpreted as a tentative sign that inflation had peaked.
Perception of the current environment for doing business was “the worst on record”, MNI Indicators said.
There was also pessimism about the job market that “hit an all-time high”.
Russians were less willing to buy a car, house or large household item, MNI Indicators said.
This coincided with a conclusion by Sberbank, Russia’s biggest lender, which saw it as an indication of consumers calming down after “exuberant” shopping for big-ticket goods late last year stirred by fears that the ruble would keep plunging.
Sberbank argued that Russians were generally more optimistic in the first quarter of 2015 than in the last quarter of 2014 but that they had become thriftier and had more worries about the overall job situation.
In spite of the central bank cutting the key rate twice since the beginning of the year, the majority of respondents in MNI Indicators’ latest poll still expected the cost of credit to rise.
“Consumers are facing a torrid time at the moment and the outlook suggests they will continue to do so for some time to come. While the government is making some effort towards supporting spending through subsidising car and house loans, it’s difficult to see these having a significant impact for the time being,” said MNI Indicators chief economist Philip Uglow.
“Just as it was for our business survey, consumer sentiment in the first quarter of 2015 as a whole was the lowest in the survey’s history. Even though official data recently confirmed that Russia was able to eke out some growth in the final quarter of 2014, our indicators suggest the economy probably contracted in the first quarter of 2015.”