Retail sales in Russia surged 5.6% year on year in September of 2021, accelerating from a 5.3% increase in the previous month, above market expectations of a 3.8% rise. On a monthly basis, retail sales declined 1.5%, after a 3.4% gain in August.
Retail sales turnover added +5.3% y/y in August, with non-food advancing +7.5% y/y and food being up +2.8% y/y. The August print exceeded the Bloomberg consensus estimate of +4.9% y/y.
Retail sales momentum – the seasonally adjusted monthly growth – was positive, underpinned by August social support measures worth roughly 6% of monthly retail sales turnover: prior to social payments disbursal, the retail sales momentum had been cooling. Retail sales momentum was in the black in both non-food and food: the former increased +0.3% month on month SA, and the latter grew +0.1% m/m SA, according to our estimates.
Private consumption recovered strongly in the first half of the year, with seasonally adjusted consumption in the second quarter of the year being the highest ever recorded. This was influenced by e.g. recovery of savings accumulated during corona periods to consumption. Russia's seasonally adjusted GDP grew by as much as 3.5% in the second quarter from the first quarter. Economic activity has thus clearly risen above pre-pandemic levels.
A more robust economic backdrop led to higher incomes. The growth in real disposable incomes in 3Q21 surged to 8.1% y/y vs. 7.4% y/y in 2Q21 and -3.7% y/y in 1Q21. Real money incomes were mainly driven by the expansion in salaries and wages; entrepreneurial activity; and social outlays. While the recovery in corporate profits supported salaries and wages, budget spending boosted social expenditures. The unemployment rate improved further, falling to 4.3% SA in September vs. 4.4% SA in August.
Despite rate hikes, demand for retail loans was up 4.6% SA quarter on quarter in 3Q21 vs. 6.8% SA q/q in 2Q21 (+23.9% y/y in 3Q21 vs. +21.7% y/y in 2Q21). Loan demand, which was up 27% y/y in September, drove the growth in mortgages.
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