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. Last Updated: 07/27/2016

Retail Decline Slowing as Consumer Confidence Rises

Retail sales fell in December at the slowest pace since March as consumer confidence rose and the stabilizing currency and easing inflation boosted household spending, the State Statistics Service said Wednesday.

Sales declined 3.6 percent from a year earlier, compared with a 6.4 percent drop in November, the service said. The median forecast of 15 economists surveyed by Bloomberg was for a decrease of 5.2 percent. Sales soared 20.2 percent from November and slid 5.5 percent for the full year.

Gains in consumer spending may help sustain an economic recovery that saw the economy grow a seasonally adjusted 1.9 percent in the fourth quarter after posting its deepest contraction on record, slumping 10.9 percent in the second quarter and 8.9 percent in the third. The Central Bank cut interest rates 10 times between April and December in a bid to unlock bank lending.

“Due to the combined effects of a strengthening ruble and a return to more aggressive store rollout programs, dollar-based growth rates” in Russia’s retail industry “should return to near pre-crisis levels,” Brady Martin, an analyst at Deutsche Bank, wrote in a Jan. 25 report.

Deutsche Bank raised target prices on Russian retailers and upgraded the industry, predicting that consumption will grow 5.2 percent by the end of 2010, followed by an additional 6.2 percent increase the following year.

The ruble regained 26 percent between its February low and November peak of 28.6613 per dollar as oil, the country’s chief export, more than doubled. The ruble posted a 3.5 percent drop last month, retreating 2.9 percent against the dollar in 2009.

Household spending helped Magnit increase sales 23 percent in December as it added 130 stores last month. X5 Retail Group said fourth-quarter sales climbed 23 percent while M.Video saw retail sales rise 1 percent in the fourth quarter.

Russian consumer confidence rose 5 percentage points in the fourth quarter for the third consecutive quarterly advance after dipping to the lowest in at least seven years during the first three months of 2009, according to the State Statistics Service, which said the gauge showed a “steady rise in the level of consumer expectations in the course of the entire year.”

Service industries ranging from banks to restaurants grew for a fifth month in December, advancing to 53.4 from 53.3 in November, VTB Capital said on Jan. 6, citing its Purchasing Managers’ Index.

Disposable incomes jumped 7.6 percent in December after growing a revised 3.5 percent in the previous month. Real wages advanced an annual 0.6 percent in December after a revised 0.5 percent decline the previous month.

Retail sales may rise 3.3 percent in 2010 as inflation slows to between 6.5 percent and 7.5 percent for the year and disposable incomes gain 3 percent, the government said in a Dec. 30 report.