Russian retail sales fell last month for the first time in more than five years as real wages plunged the most since 1999, underscoring the damage inflicted on the economy by a tailspin in oil prices and the ruble’s collapse.
Sales declined 4.4 per cent from a year earlier after expanding 5.3 per cent in December, the Federal Statistics Service in Moscow said Wednesday in a statement. The median estimate of 14 economists surveyed by Bloomberg was for a 1.9 per cent decline. Wages adjusted for inflation shrank 8 per cent.
The drop in consumption, which accounts for about half the economy, is the latest blow for President Vladimir Putin as Russia lurches into recession following the oil rout and US and European sanctions over Ukraine. The fastest inflation rate in almost seven years and the ruble’s 46 per cent slump in 2014 are eating into workers’ paychecks, putting Russia on track for the biggest drop in consumption in more than two decades.
“We’re going to see the first fruits of the upcoming recession through deep negative numbers of private consumption growth,” Vladimir Miklashevsky, a strategist at Danske Bank A/S in Helsinki, said before the release. “We expect macroeconomic indicators to hit the bottom during the second quarter.”
McDonald’s is among companies reeling from the downturn in Russia. The world’s biggest fast-food chain plans to open fewer new restaurants this year and wants to keep price growth below inflation to appeal to customers.
The Economy Ministry forecasts gross domestic product will contract 3 per cent in 2015, with retail sales falling 8.2 per cent and investment tumbling 13.7 per cent. Real wages will probably decline 9.6 per cent and disposable incomes shrink 6.3 per cent, the ministry estimated.
Bloomberg News, edited by ESM
