Page 64 - RusRPTOct20

4.5.3​ Retail sector dynamics
Data released on September 20 showed a surprising slowdown in retail sales growth from -1.9% y/y in July (revised from -2.6% y/y) to -2.7% y/y in August​. The evidence had pointed to another strong recovery in retail sales, but the breakdown showed that the sector was weighed down by a sharp fall in food sales, from -2.0% y/y to -4.1% y/y, while non-food sales continue to recover, from -1.7% y/y to -1.2%.
In August, consumer spending patterns improved only slightly versus July (up 0.2% y/y versus down 0.7%). This was primarily due to spending on services, which fell 17.5% y/y following a 21.6% contraction in July. Food spending growth slowed to 5.6% from 7.2% in July. Non-food spending growth eased to 7.5% from 9.1% in July. Slowing growth in both food and non-food spending indicates that consumer demand likely remained weak in August following the relaxation of the lockdown, which boosted consumer activity in June and July. We also expect the recovery to remain slow this year.
Analysts at VTBC associate the slowdown in consumer demand with a number of factors. i) The fading effects of deferred consumption. ii) The
64 ​RUSSIA Country Report​ October 2020 ​ ​www.intellinews.com