Page 40 - RUSRptSept18

4.5.3 Retail sector dynamics
Retail sales softened from 3% y/y in June to 2.5% y/y in July , with food sales slowing from 3% y/y to 1.5% y/y. At the same time, the non-food category continued to accelerate, reaching 3.3% y/y versus 2.9% y/y in June, which could be attributed to an ongoing expansion of consumer crediting that outpaces incomes and savings .
VTB analysts expect further improvement in non-food sales on the back of "precautionary spending", which involves households front-loading durable purchases, trying to outrun the effects of ruble weakness and the forthcoming VAT rate hike.
In July the average receipt in Russian retail stores amounted to RUB496 ($7.4), declining by 3.3%. The indicator declined for the fourth month in a row and reached a two-year low, according to Romir data cited by Vedomosti daily on August 20.
The data are in line with the latest July statistics, which showed retail trade growth slowing and food sales contracting. Non-food sales continued to expand fueled by booming consumer credits , and possible front-loaded purchases on the weakening ruble and upcoming VAT hike.
In Moscow, the average receipt declined by 1.2% last month while in St Petersburg it dropped by 7%. In other cities with over 1mn residents, the indicator was down by 3% in July.
Notably, the large cities are hit the hardest and have to adjust their consumption patterns. In cities with populations of 0.5mn-1mn, the average receipt at the checkout was down by 7.3%, while for cities with fewer then 0.5mn people the decline was negligible, at 0.7% (likely due to an already low base).
Another trend confirmed in the data is the ongoing decline of the hypermarket format in the retail universe. Hypermarkets saw the average receipt decline by 9% to RUB741, while for supermarket formats the decrease was 4.8% to RUB347, and for discounters 3.4% to 3.4% to RUB340.
40 RUSSIA Country Report September 2018 www.intellinews.com