Recession in Russia

Consumer spending rose by 1% in August

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In real terms, adjusted for the inflation, consumer spending rose by 0.97% in August compared to July. Nevertheless, it is still less than in previous years, according to Romir Research Center.

In July, Russians’ real consumer spending fell by 4.7% after rising by 2.5% on a monthly basis in May and June. Compared to July, in August the daily expenses traditionally increased – by 1.4%, which is 1 percentage point higher than the official inflation rate for August.

The Russians tend to buy products with promotional prices, thus compensating the difference in price growth.

www.retailer.ru

In Russia, prices for fruit grew 5 times more than in the EU

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Between January-July 2015, consumer prices for fruits in Russia grew by 25.4%, %, according to the Russian Federal Statistics Service. Whereas in the EU the average increase was 5.4%.In general, for the first seven months of 2015, price for food in Russia grew by 10.6%, in the EU it declined by 0.1%.

In January-July 2015, in some EU countries food prices increased significantly too, but this increase was several times lower than in Russia. For example, in Hungary products rose by 3.3%, in Slovenia – by 2.7%.

www.rbc.ru

 

Oil price plunge pushes ruble to seven-month lows

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A plunge in prices for Russia’s main export, crude oil, sent the ruble crashing to its weakest level since January, threatening to push the country’s already-shrinking economy deeper into recession.

Russia’s ruble eased as far as 71.65 to the U.S. dollar on Monday as concerns over the Chinese economy drove the price for Brent crude below $45 a barrel for the first time since March 2009. The ruble was trading around 36 to the dollar this time last year.

www.wsj.com

Russia lowers most important interest rate

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The Russian Central Bank has announced an interest rate cut of 150 base points. That means the interest rate will be 12.5% from May 5 onwards, with the interest rate being 14% now. With this measure, the Central Bank is looking to stimulate economic growth. The bank is adjusting the interest rate for the second time this year. The rouble has been on the rise after the significant decline late last year, and the economy is also recovering. According to figures, the GDP, corrected for seasonal influences, decreased by 2.5% in January. The economic growth amount to -1% in February, and this growth figure had halved in March. The inflation is also decreasing slightly, amounting to 16.5%.

www.freshplaza.com

Price growth for fruits and vegetables

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According to the St. Petersburg Committee of Entrepreneurship Development and Consumer Market, during CY2014 prices on produce have increased by 16.2%. (in 2013 growth was 13.4%), at the same time, during first months of 2015 prices started to accelerate considerably. Price comparison between January 19, 2015/December 30,2014: cabbage – 43.3%, cucumbers — 45,8%, carrots — 17 %, tomatoes — 16,5%, onions — 13,7%, potatoes — 10,8%, apples — 9,8%.

www.dp.ru

 

Price increases since beginning 2015

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According to figures from the Russian Ministry of Agriculture, the price of cabbage has gone up by 49.5% between January 1 and February 16, to 21 roubles (29 cents) per kilo, making cabbage the product with the fastest increasing price. Onions got 29.1% more expensive. The price for onions is virtually equal to the cabbage price. Potatoes yield 19.7 roubles (27 cents) per kilo, an 18.8% increase. The carrot prices went up by 18.3% to 25 cents per kilo.

www.freshplaza.com

Retailers firm prices for socially important products

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Retail chain Metro Cash & Carry firmed prices for socially important goods – milk, bread, cereals and macaroni till mid-April. Previously, retail chain Dixy declared the price freeze until March 9. It concerned buckwheat, rice, millet, macaroni, sunflower oil and butter, flour, dumplings and frozen fish. In addition, the company maintains a minimum trading margin on some items like sugar, salt, cereals, oil, eggs.

Retail network “Okay” firmed prices for some socially important goods at the end of November last year.

www.echo.msk.ru

Retail development in 2015

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Most leading retail companies have already announced their plans for the current year. Magnit presented the most ambitious program of the development. Initially, the retailer planned to open 1,100 convenience stores, 80 hypermarkets and Magnit Semejnij stores and 300-350 cosmetic stores, now they are planning to launch 1,200, 90 and 800 stores respectively.

Auchan plans to open 7-8 stores, investing 10 billion rubles into the development of business in Russia this year. Metro Cash & Carry is going to open the same amount of stores this year as they did the last year (in 2014 they opened seven stores). Neither Metro nor Auchan have not change the plan of developmet for the year.

Lenta is going to launch at least 10 hypermarkets during the first half of 2015 . This is more than in the first half of last year, when the company opened five hypermarkets and four supermarkets. Their plan to double the retail space in three years (from the end of 2013 to the end of 2016) remains in force.

Dixy did not report that their development plans would change this year. Last year, in November, Ilya Yakubson, Dixie president, spoke about the opening about 500 stores in 2015.

In the end of the last year, Tony Maher, head of Okey company, spoke of plans to open more than 12 hypermarkets and to launch new project – about 40 discounters “Da!” in 2015. The start was scheduled for the spring. For this projects the retailer was going to use debt funds in the amount of 8 billion rubles. Today, the retailer intends to continue developing, but at a pace that “would be sustainable for the business and does not require significant new credits at the current rates,” – as it was stated in the report on the results of 2014.

The only company who has not announced its development plans for the year is X5 Retail Group.

www.retailer.ru

Retail trade turnover to be reduced by 8.2%

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In 2015 retail trade turnover will be reduced by 8.2%, according to the forecast of the Ministry of Economic Development. Even during the 90-s and the crisis of 2009, the trade was not reduced so much. The main reason is that the government has no anticrisis plan that would stimulate consumer demand. Authorities are not planning to increase the budget expenditures, and the Central Bank is not going to stimulate bank loans for citizens.
The reduce of trade turnover by 8.2% is one of the main factors of the projected GDP decrease by 3% this year, as the share of retail trade in the GDP is about 15%. According to the Russian Federal Statistics Service, in the last 25 years in Russia trade turnover decreased five times – in 1991, 1995, 1998-1999 and 2009. The biggest drop was recorded in 1995 (6.2%). In the crisis of 2009, the decline was 5.1%. All the other years there was a growth that exceeded the growth rate of GDP. In the past year, according to the preliminary data, GDP increased by 0.6% and retail trade turnover increased by 2.5%.
According to the forecast, the wages in nominal terms in the private sector will not be increased this year, and as the inflation rate is expected to be 15.8%, the real wages will decrease. Also, the government is going to reduce budget expenditures by 10% this year, in 2016-2017 – by 5%.
The officials say that consumer demand ceased to be a driver of the economic growth, and therefore, they do not try to support it.
Elvira Nabiullina, the head of the Central Bank, said in 2013 that consumer demand, driven by increases in incomes and consumer credits, was the driver of the economy in 2011-2012, but not now.
“Attempts to stimulate consumer demand led to an increase in imports, increase of consumer credits and, in fact, to fueling the inflation,” – she said. According to the head of the Central Bank, the new driver of economic growth should be investments, but investments decraesed last year and will decrease in the current year. According to Alexei Ulyukayev, Minister of Economic Development, investments in 2015 will be reduced by 13.7%.

www.retailer.ru

Russia’s PM announces import substitution efforts in food industry to continue

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The prime minister of the Russian Federation, Dmitry Medvedev, said, during the Gaidar Forum 2015, that plans for import substitution in various production industries will be adopted by mid-2015.

“By the end of the first half of the year, plans for import substitution in the production industry should take effect,” Medvedev said. He drew special attention to the large number of exports, including non-commodities.

The agriculture production, including Vegetable production, will be the one of the most important directions for developing Russia’s agro-industrial complex, the prime minister said. He also confirmed new changes to state programs, including speeding up the development of the agricultural complex. Fruits and Vegetables producers are to receive additional support.

“I’m adding that Russian agrarians have already made significant progress,” he said.

The Gaidar Forum 2015 was an event that gathered leading scientists, politicians and representatives of global financial and business elites to discuss the global issues, according to the forum’s website. The forum also provides international participants with information regarding the key trends in Russia’s social and political development, state of business environment and investment climate.

www.fruitnews.info