Page 46 - RusRPTMay20

(+RUB145bn) in annual, monthly and RUB terms were of almost the same scale in March, and that non-food prices are more sensitive to changes in FX, we would have expected the acceleration in non-food prices in March to be more pronounced than that of food prices.
However, in March, food inflation increased +0.5pp (from +0.2% m/m SA in February to +0.7% m/m SA in March) compared with a +0.4pp (from +0.1% m/m SA to +0.6% m/m SA) acceleration in non-food inflation in m/m SA terms, according to VTBC. This might indicate that:
i) food and non-food retailers set prices differently;
ii) the FX pass-through is mitigated by issues related to the non-food CPI data; iii) the non-food retail sales data for March might be exaggerated.
Consumer demand may take three years to recover from the crisis. The decline in Russian consumer markets spans 90% of all goods and services​, while consumers are expected to keep cutting spending in the coming six months, ​Kommersant​ daily reported on April 23 citing a study by the Boston Consulting Group (BCG) and Romir holding.
As reported by ​bne IntelliNews​, strict lockdown measures are expected to remain in place in Russia until end-May, but the slowdown in economic activity might be much more prolonged.
The study suggests that under the moderately optimistic scenario a full consumption recovery would require up to three years.
Up to 50% of Russians plan to keep saving on food, apparel, electronics, and entertainment. In the coming six months 15% of Russian consumers expect their incomes to decline further, the third worst result globally after Italy (18%) and the US (16%).
Analysts and retailers surveyed by ​Kommersant​ believe that demand could recover to March's levels in the second or third quarter of 2020, while noting that consumers are switching more to fresh produce in the meantime.
The liquor and beverages segment will be hit by both declining retail sales and closure of bars and other entertainment venues. Restaurants and venues are likely to see a prolonged bottoming out of demand, until solid solutions for containing the spread of COVID-19 or a vaccine are available.
The predicted upsurge in delivery and online services is also questioned by the study, as 34% of respondents plan to cut back on delivery services.
46​ RUSSIA Country Report​ May 2020 ​ ​www.intellinews.com