inflation expectations of the population were at a minimum since March 2021

According to a survey conducted by Infom for the Central Bank from June 1 to June 13, inflation expectations of the population were at a minimum since March 2021. Respondents’ data record a decrease in both expectations and assessments of consumer price dynamics observed by the population. The median estimate of inflation for the year ahead fell to 10.2% in June from 10.8% in May, and for five years to 10.8% from 11.3%. The estimate of inflation observed over the last year in June was 13.9% against 14.1% in May.

At the same time, the FOM survey also records that the propensity of households to save is declining, while the propensity to consume is growing. Thus, the share of those who prefer to spend free money on buying expensive goods, rather than save them, rose to 31% in June, the highest since October 2018. Since March 2020, the ceiling has also been reached and assessments of the favorable conditions for large purchases. To 33% from 31% in May increased the proportion of people who prefer to keep their savings in cash. “Cash is not the only liquid savings that can be easily turned into consumption: the share of household funds in current accounts is now close to historical highs – such funds account for more than 40% of all ruble deposits of individuals,” analysts of the Solid Numbers Telegram channel say.

At the same time, the Central Bank consumer sentiment index decreased in June (by 0.6 points compared to May), but remained close to the highs since the first half of 2018 (see chart). The decrease was mainly due to worsening expectations of changes in economic conditions in the country in a year and five years (by 1.5 points compared to May), although estimates of the prospects for personal financial situation for the year ahead grew (while estimates of its actual change over the year decreased). The sub-index of the current state of consumer sentiment increased in June due to improved estimates of the moment for making large purchases.

Meanwhile, back in the first quarter of 2023, as well as at the end of 2022, according to CMASF estimates, the savings rate in deposits was growing (seasonally excluded), which “seems to be explained by an increase in interest rates,” and the consumption rate (also seasonally excluded) — decreased, which held back the growth of trade. Up-to-date data from the Central Bank so far also indicate that bank deposits are growing faster than lending to citizens (see Kommersant of June 26).

Artem Chugunov