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Consumer boom in Russia followed by plunging consumer demand

February 06, 2015, 18:16 UTC+3 Zamyatina Tamara
© Alexander Ryumin/TASS

MOSCOW, February 6. /TASS/. December’s panic purchases have given way to plunging consumer demand in Russia.

The national statistics agency Rosstat testifies to the fact as well as almost absurd everyday situations.

Russians have rushed to have off hands the goods bought in the wake of panic moods when in mid-December the ruble drastically fell against the US dollar and euro (weakening beyond 100 rubles per dollar and 80 rubles per euro).

Hundreds of notices flooded online ad shops offering house appliances and electronic devices bought at the end of last year and not used. Many owners of washing machines, televisions and expensive vacuum cleaners have frankly posted the reason for a desire to get rid of the property: "I need cash." Some have chosen another way and are trying to refund the purchase at the shop, explaining that the thing did not suit them.

Chairman of the board of the International Confederation of Consumer Communities Dmitry Yanin said the behaviour of the Russians who buy and then re-sell house appliances and electronic devices could be called "irrational."

"People fell for nationwide panic," he said adding that "many of them have no money even to buy daily necessity goods now."

An elderly woman from the city of Nizhny Novgorod located 400 km east of Moscow was so eccentric that she had spent her four pension payments on buying 320 kilos of buckwheat which is very popular in Russia and which shortages had been a trouble here then. But now that the panic has subsided, the retiree demands from the local authorities either to re-buy her cereal or to provide her with a storehouse. An average consumption of buckwheat in Russia amounts to three kilos a year so the woman will be able to eat kasha made of buckwheat for 103 years on.

Russians welcomed the New Year in with a notion that they would have to tighten their belts due to falling oil price, sanctions and inflation. Rosstat said inflation had rocketed to a double-digit level of 11.4%, the highest since 2008, and climbed by another two percent in January.

Russia’s Federal Antimonopoly Service got on its hotline a record number of complaints of rising prices in retail trade.

An unsubstantiated increase of food costs did not accidentally get in spotlight of the public — as in shops certain foodstuffs doubled their costs in January and some prices skyrocketed twofold or even fourfold in January, breaking all the limits of reasonable inflation even with an added devaluation component. Evidently, retailers intentionally profiteered by adding two or three costs to the price of goods.

A tough economical regimen has not become a novice for many Russians because of a dramatic rise in costs of goods and services.

The Finance Institute at the Russian government said in a research that consumption had been the lowest in the capital Moscow and in the cities of Irkutsk [eastern Siberia] and of Naberezhny Chelny [a major industrial center in Tatarstan about 900 km east of Moscow] in January against last November. Consumer confidence index slipped by 9% a month in Moscow.

The real estate market has faced demand plummeting to 18% against November, with housing demands coming down 27% in Moscow and 25% in St Petersburg.

The Higher School of Economics’ center for market investigations said the business climate has worsened in ten out of 15 service activities, mainly house appliances maintenance companies and companies dealing with personal services.

Travel sector has slowed up its business, while some restaurants, cafes and shops are folding it up.

Experts voice their concerns about a coming consumer depression amid declining incomes in the country.

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