All hope for repatriates – Newspaper Kommersant No. 243 (7444) of 12/29/2022

The consumer optimism of the population of Russia, recorded by the surveys of Rosstat and the Central Bank, is not visible in the macroeconomic summary of the statistical agency for October-November 2022. It reveals a return of private demand to stagnation after an attempted rebound in the third quarter – and a halt in wage growth after a notable drop in the previous quarter. The CMASF directly points to a decrease in the availability and quality of goods and shrinkflation – and suggests that demand can only be supported by the return of citizens who previously left the country.

Retail turnover in November 2022 in annual terms decreased by 7.9% against a fall of 9.7% in October and 9.8% in September 2022, Rosstat reports. “Consumer demand showed an improvement in dynamics in November, but kept lagging behind last year. The total turnover of retail trade, public catering and paid services to the population was 4.8% (yoy) below the level of last year (minus 6.7% a month earlier),” the Ministry of Economy adds, revealing the main source of annual improvements in public catering.

Intra-annual consumption dynamics as a whole, however, is deteriorating. The entire volume of consumer spending by citizens (goods, services, catering), after an average growth of 0.4% per month in the third quarter, moved to stagnation at the level of 0.1% in October-November 2022. Sberindex also recorded a continued deterioration in consumption dynamics (for Sber cards) in the first week of December 2022 (see Kommersant dated December 21). The CMASF notes the “switching on of the effects” of consumption degradation — the deterioration in the availability and assortment of goods against the background of shrinkflation (a decrease by the manufacturer in the quantity, volume or weight of a product in a package while maintaining or disproportionately reducing its price) — and citizens are likely to notice.

According to Rosstat, the mood of citizens regarding the current consumer situation in November-early December 2022, as in the third quarter, improved (according to the Central Bank, at the maximum since September 2021) against the backdrop of worsening expectations (see Kommersant from 21 December). However, the qualitative result of such changes has so far only manifested itself in a change in the sign of the stagnation of consumption as goods from a minus in the third quarter to a plus in October-November. According to the CMASF, seasonally adjusted month-on-month, consumption of manufactured goods in November still increased by 0.4% after an increase of 0.1% in October 2022, however, the reason, as the center’s analyst Igor Polyakov suggests, is partly due to that “part of the citizens who went abroad returned.”

At the same time, in October 2022, thanks to lower inflation, Rosstat managed to record the first growth in real wages in the last six months — by 0.4% in annual terms. “If in the previous few months the growth of salaries in the public sector significantly lagged behind the private sector, then in October the nominal rates apparently converged: 12.5% ​​and 13.9% year-on-year against 8% and 15%, respectively, in September,” analysts say Telegram-channel “Solid figures”. They record that the sector of “public administration and ensuring military security” is not only the main employer in the labor market, but also a source of wage growth. They also grew above average in industries where output dynamics were stronger: in electronics, optics and printing (24% yoy); light industry (22%); production of finished metal products and other vehicles (8%), repair of machinery and equipment (17%). The CMASF also calculated that month-on-month, seasonally adjusted, the growth in real wages stabilized at 0.1% in October, the same as the monthly average in the third quarter, after a decline of 1.5% in the second quarter of 2022.

“The growth of wages reflects the tension in the labor market — not only the shortage of labor is pro-inflationary, but also the growth of wages at a rate higher than the growth rate of labor productivity,” conclude the authors of the Solid Numbers Telegram channel. According to the CMASF, in October-November, the demand for labor has stabilized after a failure in September due to mobilization. This, the center believes, is also partly due to the return of “relocators” to Russia – for the expected bonuses from employers and for fear of tightening regulation.

Artem Chugunov