Page 45 - RusRPTOct21

4.5.3 Retail sector dynamics
Retail sales performed well in August. Sales growth picked up from (an upwardly-revised) 5.1% y/y in July to 5.3% y/y in August. We estimate that this was equivalent to an expansion of 0.6% in seasonally-adjusted month-on-month terms, an acceleration from the rates of 0.3-0.4% m/m in recent months.
Surprisingly, most of the strength reflected a pick-up in food sales. It’s possible that part of this reflects the cash handouts to families in August ahead of last month’s elections, with households using these handouts for spending on food amid high prices. Additional handouts to pensioners last month (total giveaways amount to 1% of GDP) suggest that sales growth should remain strong at the start of Q4.
After extraordinary growth in January of a 35.1% expansion in retail sales in April year-on-year causey the low base effects of the lockdown imposed in that month in 2020 the low base effects have worn off rapidly.
Retail turnover fell to a 5.1% expansion in July reflecting the end of the lockdown a year earlier but turnover started to grow again in August to 5.3% y/y as things returned to normal.
One of the factors driving the increase is pent up demand being released and funded by the excess saving Russian accumulated during the pandemic.
Another is a return to positive territory of growth of real wages, although rising inflation is acting as a damper on that already.
The results of expanding retail turnover chime with the latest Watcom Shopping index results which also show better than expected increase in foot traffic in the leading Moscow malls that has recovered to more or less pre-corona crisis levels in September.
45 RUSSIA Country Report October 2021 www.intellinews.com