Customers demonstrate steadfastness in their purchasing behavior
Consumer Sentiment: A Mixed Bag
Amidst a surge in consumer inflation expectations (as of April 18th), consumer sentiment managed to maintain its previous month's level, as per the Bank of Russia.
This stability was achieved despite a mixed picture in the indices. The index of expectations rose by 0.7 points month-over-month but plummeted by 3.9 points year-over-year. On the other hand, the index of current conditions dropped by 1.1 and 3.3 points respectively.
Interestingly, expectations for personal financial conditions and economic conditions in the country over the next year showed improvement. However, assessments of the country's prospects over the next five years worsened. In terms of the current situation, evaluations of personal financial conditions over the past year decreased, while assessments of the current moment's suitability for major purchases increased.
In April, the propensity to save remained relatively unchanged. About 50.9% of respondents preferred to save rather than spend on expensive goods, a percentage lower than the average since 2016 (54%). Respondents in April more frequently reported a preference for keeping savings in a bank account (48%, up 2 percentage points month-over-month and 4 points year-over-year). The share of those preferring to keep cash decreased to 26% (down 3 p.p. and 1 p.p. respectively). The share of those preferring to spend was 30% (down 0.2 p.p. and up 0.8 p.p.).
According to wage data published in the Unified Interagency Information-Statistical System (EIMSS) of Rosstat for February, wages increased by 3.9% year-over-year in real terms, lower than the 7.9% growth in January (January-February - 5.8% compared to 10% for the same period in 2024). Analysts from the Telegram channel MMI suggest that the main reason for the slowdown in wage growth in Q1 of this year is the postponement of annual bonus payments to December to save on the increased NDF from 2025.
In February, real wage decreases were observed in the highest-paying sectors - oil (minus 0.5% year-over-year), finance (minus 3.7%), and IT (minus 6.2%). However, these observations might be attributed to the bonus story's impact, which will likely persist in March. Analysts also expect a stable wage growth trajectory in the second quarter of 2025, with real wages expected to continue growing by 4-6% annually, potentially exerting an inflationary impact. It's worth noting that the Ministry of Economic Development expects real wage growth of 6.8% and inflation of 7.6% in 2025 (Kommersant, April 21).
As for the wage slowdown in oil, finance, and IT sectors in April, search results do not provide specific reports supporting this. However, the broader economic context, including the Q1 2025 GDP growth slowdown and potential demand concerns tied to softer growth forecasts, may have contributed to sector-specific wage pressures.
- Despite the surge in consumer inflation expectations in April, the average savings rate among consumers has remained relatively stabilized, with only a slight decrease compared to the average since 2016.
- However, the financial situation of businesses seems to have deteriorated, as shown by the decrease in wages in the finance sector by 3.7% year-over-year in April.
- The stabilization in consumer sentiment in April did not extend to personal financial assessments over the past year, as these decreased compared to the same period in previous years.
- In contrast, the average expectations for personal financial conditions and economic conditions in the country over the next year have shown improvement, indicating a potential for business growth in the future.
