Russian retail sales up overall, but growth has slowed in recent months

The volume of retail sales last year grew by 2.6 % y-o-y. The pace of growth varied during the year, however, slowing to 2.3 % y-o-y in December. After several years of contraction, Rosstat reports that the volume of retail sales increased by roughly 5 % in the time period of 2017–2018.

The volume of food sales rose by 1.7 % last year. The volume of retail sales increased despite lower household disposable incomes (BOFIT Weekly 2019/06). This may be partly explained by the rise in sales of inexpensive goods as well as a distinct increase in household borrowing. The stock of household borrowing increased by 22 % last year. However, most of the increased borrowing came from housing loans (BOFIT Weekly 2019/07).

In January 2019, retail sales volume growth was dragged down by a general increase in the value-added tax (VAT) rate from 18 % to 20 %. January retail sales volumes rose by 1.6 % y-o-y, while growth in sales of non-food goods slowed sharply to just 1.2 %. The VAT rate on food was unchanged, however, and growth in food sales picked up slightly last month.

Annual growth in Russian retail sales

Source: Rosstat.