Russia's 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 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 (-8.3% yoy). 

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%), we look at sales of durable goods across the board, which shows overall retail sales slightly higher (at -8.5% yoy versus -9.2% yoy in August and -9.0% yoy consensus)", says Societe Generale.

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