Page 52 - RusRPTNov19

4.5.3 Retail sector dynamics
September retail sales turnover expanded 0.7% y/y, after +0.8% y/y in August. But VTBC estimates that the sequential growth remained at zero after the seasonal correction. The steady little growth in y/y terms can mostly be attributed to retail sales in the food segment, which went from growth of +0.6% y/y in August to +0.4% y/y in September. In the meantime, according to Rosstat, food production increased by the most positions. “It had already seen downward pressure on producer prices and, in our opinion, this might be reflected in the further dynamics of consumer prices in the food segment as well. Non-food retail sales growth accelerated from +0.9% y/y in August to +1% y/y in September, which is little relative to the +2.3% y/y in January 2019 (and thus is a good indicator of moderate consumer demand),” said Isakov.
Consumer demand remains sluggish. Despite stable dynamics in real wage growth (up by 3% y/y in July and August), growth in retail trade continued to decelerate. It rose by just 0.8% y/y in August, down from the 1.1% the month before (up by 1.5% in 8m19). Slower retail lending and still weak dynamics of real disposable income, which was down 0.2% y/y in 2Q19 (the figures are only published quarterly) are likely the main reasons behind the deceleration.
The acceleration of household consumption growth to 2.8% y/y in 2Q19 looks puzzling given retail growth slowed during that period (from 1.9% y/y in 1Q19 to 1.6% y/y in 2Q19). However, this could be explained by an improvement in real disposable income - although still down by 0.2% y/y in 2Q19, this was still better than the 2.5% y/y decline in 1Q19 - and strong growth of retail lending during this period.
52 RUSSIA Country Report November 2019 www.intellinews.o