Russian retail sales surge in December despite slump in wages

[MOSCOW] Russian retail sales surged in December despite a sharp slump in real wages, adding to evidence that shoppers rushed to stock up on consumer goods before companies hiked their prices because of the weaker rouble.

Retail sales rose by 5.3 per cent in December in annual terms and by 23.6 per cent month-on-month, Federal Statistics Service data showed on Wednesday, outstripping analysts' expectations and in contrast to a bleak economic outlook for Russia.

Yet real wages fell by 4.7 per cent in annual terms in the same month, showing that inflation and a slowing economy are cutting deeply into people's earnings.

Russian food chains reported higher sales in the final quarter of 2014. Sales of cars and electronics also rose in December.

Capital Economics economist Liza Ermolenko commented in a note: "This (increase in retail sales) was almost entirely driven by panic buying on the back of the sharp fall in the rouble... Households rushed to stock up on imported goods before shops started to increase prices."

Darya Isakova, senior economist for Russia at Otkritie bank, also said the boost was probably short-lived and that 2015 could see an acute contraction in the indicator.

"A worsening of the situation on the labour market, a worsening of the situation with wages and the general uncertainty will have a depressing effect on retail sales," she said.

REUTERS