Russian private consumption is set to improve, but only for a short time

The intense depreciation of the ruble in August, weakening nearly 14% against the USD, and early signs that FX was boosting inflation reminded us of late 2014 when households spent a remarkable portion of their ruble savings, releasing substantial pent-up demand. 

The current situation is very different, as households saw a period of dramatic real income contraction in H1 15. Nonetheless, anecdotal evidence confirms a major increase in consumer confidence and even greater demand for specific durable goods. 

For example, according to the Association of European Businesses, sales of light vehicles increased in August to -19.4% yoy versus -27.5% yoy in July. Although ytd sales improved by only a few points, thus remaining low (at -33.5%), looking at sales of durable goods across the board, which shows overall retail sales slightly higher.

"Nonetheless, this spike in consumer optimism is unlikely to last long, thus the overall trend will remain depressed", says Societe Generale.