Actual consumption does not keep up with expected

Actual consumption does not keep up with expected



Household consumption, the dynamics of which this year largely determines the state of the economy, is growing to a greater extent at the level of expectations of the population and retail companies than according to actual data, analysts from the ACRA rating agency note in their review.

They came to this conclusion by examining the dynamics of macro indicators that help track changes in household behavior. Thus, real consumption has not yet reached the level of the end of 2021 — depending on the analyzed indicator, the difference is 3-7%. It is also noted that retail turnover in 2022 experienced a slightly deeper decline than household final consumption. Consumer sentiment of households at the beginning of this year grew significantly faster than their actual propensity to consume (see chart). About the same share of income was spent on goods and services in the first quarter as before the crisis, and consumer sentiment, based on survey results, was more optimistic.

At the same time, the Retail Business Confidence Index in the first quarter of 2023 recovered to approximately the level of the fourth quarter of 2021. Although the balance of business responses to the question about the actual change in the volume of demand remained in the first quarter at a level of 7 percentage points (p.p.) below the pre-crisis level, it exceeded it in April.

“The end of February and the beginning of March, apparently, turned out to be significantly more successful for the consumer sector than April and the beginning of May,” the authors of the review record. The Central Bank's weekly data on incoming financial flows show that in the first quarter, for several weeks in a row, sales could be 6–7 pp more intense than the trend, but then they nevertheless returned to it.

According to Sberindex, the nominal spending of the population on goods and services from May 22 to May 28 increased by 7.3% in annual terms against 9.3% and 7.8% in the previous two weeks. “Real consumer demand in May versus April (most likely seasonally adjusted.— "b") decreases. The annual rates are also declining both by 2022 and pre-crisis 2021. Weak demand is noted in “non-sales”, and the cooling of rather overheated growth rates of services also continues,” analysts of the MMI Telegram channel record.

Artem Chugunov



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