Page 71 - Russia OUTLOOK 2024

The Russian government and the CBR moved to toughen the requirements for state discounted mortgage programmes in December, as expected, in order to cool down the mortgage market. The down payment on the state-supported loans was raised from 15% to 20%, while the average interest rates also rose following four consecutive key interest rate hikes by the central bank (latest in October to 15%).
And more such measures are expected to be introduced in the New Year. The Russian press reports that the government is preparing a new round of tightening of the state discounted mortgage programme, possibly increasing the minimum down payment from current 20% to 25-30% and halving the funding for the programme in Moscow and Saint Petersburg. Kommersant estimates that a 30% down payment would exclude three quarters of applicants from the current pool of would-be home-buyers.
The demand for state-supported discounted mortgage loans in October 2023 already declined by 10% and the issuance decreased by about 20%, Izvestiya daily reports citing major banks and the state mortgage agency DOM.RF.
• 5.4 Retail
Consumption in Russia surpassed the pre-crisis 2021 levels in 2023
thanks to rising nominal and real incomes.
Retail turnover in Russia in July exceeded the figures of two years ago by 1.2% adjusted for inflation, according to the data of the audit and consulting company FinExpertiza. Experts believe that this was due to the growth of household incomes and the gradual shift away from the saving model of behaviour, which was typical for 2022.
Russians' consumer activity continued to rise in August and September, but the rate declined, according to the CBR. At the same time, the labour force deficit supported fast salary growth.
The outlook for 2024 is less good as experts believe the labour shortage induced nominal pay rises have already peaked at the end of 2023 and will fall next year as growth falls, thanks to the structural constraints on the economy. However, as the economy will continue to run hot on the back of the war effort, any decline will be mild and fall from a high base.
Russian retailers will increase their food prices in January 2024 due to a slew of problems partly connected to global warming.
Wimm-Bill-Dann warned of an increase in prices for dairy products by 4.9% and for juices by 16.1%. Ehrmann yoghurts will rise in price by 5%; Multon Partners (formerly Coca Cola) is raising prices for soft drinks by 13%; Nestle is
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