Russia retail sales took a step backwards in October falling by 4.4% y/y, Rosstat data showed. The latest figure ends a trend of recovery that has seen retail sales volumes recover from a contraction of 15.3% in December 2015 to -3.6 in September.
“This is very disappointing, as the consensus had expected this indicator to drop just 3.0% y/y, pricing in a return in consumer growth,” said Alfa Bank’s chief economist Natalia Orlova in a note.
“However, the poor figure posted confirms our view that September's improvement was a one-off due to additional spending related with the parliament elections (we had expected a 4.5% y/y contraction in retail trade in October),” she added.
The poor state of consumption and the pain the average Russian is feeling from the grinding two year long recession was also seen in unemployment which roes to 5.4% from 5.2% in September.
Elsewhere, the start of recovery in retail lending by banks also seemed to stall in October, according to Alfa Bank.
“All in all, we reiterate our view that the consumer recovery will be slower than expected because of growing inequality, and it will require a more simulative budget policy to reach fruition,” wrote Orlova.