A recent study by consulting firm FinExpertiza, using data from Russian state statistics agency Rosstat, has revealed that retail trade in Russia has surpassed pre-sanction levels. The study indicates that retail sales experienced a decline in April 2022, following Moscow’s military operation in Ukraine and subsequent sanctions. However, Russians responded to these conditions by reducing unnecessary spending and building up cash reserves.
Retail turnover in Russia experienced a continuous decline for 12 months until March 2023 when it began to bounce back in April. According to the findings of the study, sales in July surpassed the pre-conflict levels. Analysts noted that the consumption of goods by the population has now exceeded the pre-crisis levels of 2021. In July 2023, retail trade turnover reached 4 trillion rubles ($41.6 billion), representing a 10.5% increase compared to July 2022 and a 1.2% increase compared to July 2021, adjusted for inflation.
The study also revealed that food sales in Russia during the reporting period grew by 4.2% year-on-year, while non-food sales experienced a surge of 17.7%. The turnover of food products increased by 2.4% compared to 2021, while non-food turnover grew by 0.3%.
However, the analysis indicated that retail trade growth has been uneven throughout the country. While regions such as Ingushetia, Kabardino-Balkaria, Novosibirsk, and Dagestan experienced significant increases in consumer goods sales, other regions are recovering at a slower pace. Examples of regions facing a slower recovery include Sevastopol, Crimea, Astrakhan, Bryansk, Belgorod, and Moscow Region.
Elena Trubnikova, the head of FinExpertiza, highlighted that purchases of non-food products, including durable goods, have significantly increased compared to the previous year. Consumers who had previously delayed purchasing durable goods now see the opportunity to make those purchases. Trubnikova also mentioned that the turnover of public catering is growing at a high rate, indicating an improvement in consumer sentiment supported by the growth of household incomes. However, she also warned that it is premature to talk about sustainable consumer optimism.
Overall, analysts expect consumption to remain strong, but they caution that fluctuations are possible. They predict that a significant portion of pent-up demand for durable goods has already been realized. Additionally, the recent interest rate hike by the central bank and the regulator’s policy aimed at cooling the credit market may slow down the issuance of new loans. This could result in reduced consumer activity while encouraging the population to save more.
In conclusion, the retail trade in Russia has recovered and surpassed pre-sanction levels, indicating a renewed consumer confidence in the market. However, uneven growth across regions and cautious predictions highlight the need to monitor and adapt to market conditions in the coming months.