MNI Russia Consumer Sentiment Indicator: Russia Consumer Sentiment Hits Record Low In May - Personal Finances, Buying Conditions Drag Down Sentiment

Consumer sentiment in Russia declined to a record low level in May, halting three consecutive months of growth.
 
Sentiment, which has followed a downward path since mid-2013, appeared to have troughed at the turn of the year, but May’s outturn suggests it’s too early to conclude that Russia is on a firm recovery path.
 
The MNI Russia Consumer Sentiment Indicator fell 5.9% to 67.3 in May from 71.5 in April. Consumers’ perceptions of both their current situation and their expectations for the future grew increasingly negative, with both measures hitting series lows.
 
Sentiment is now down 2.8% since the start of the year and 7.6% lower than a year ago. In addition, it is significantly below the series average of 83.0 and the breakeven 100-mark where the number of optimists equals the number of pessimists.
 
Each of the five components that make up the MNI Russia Consumer Indicator decreased in May, led by an 8.8% drop in Expectations for Business Conditions in One Year to 59.9 from 65.6 in April. Durable Buying Conditions hit a record low in May, decreasing 8% to 72.7 from 79.1 previously.
 
Households’ financial situation also deteriorated in May. The Current Personal Finances Indicator fell 6% to 63.0 from 67.0 in April. Expectations for a year ahead were down too, with Expected Personal Finances falling 4.1% on the month to 65.1 from 67.9.
 
Following suit, respondents reported increased reluctance to purchase a car in May, with a majority citing the cost of use/upkeep as their main reason. The Car Purchase Indicator fell to a series low, down 5.7% on the month to 62.0.

Commenting on the latest survey, Philip Uglow, Chief Economist of MNI Indicators said, “We had thought that the worst was over for the Russian consumer, but the results for May show consumer sentiment falling back to a record low.”
 
“With household finances still feeling the pressure of negative real income growth, our survey shows that buying conditions for household durable goods as well as cars declined to the worst on record. The recent strengthening in the rouble and disinflationary trend should allow the central bank to make a much needed reduction in interest rates sooner rather than later".