Russian consumers will economise in downturn

Subject

Russian consumer trends.

Significance

The current economic downturn is taking its toll on the Russian population and is affecting consumers. Ruble devaluation, depressed real wages, rising inflation and increasing unemployment are reducing domestic demand. Although government officials predict a bottoming-out of the economic contraction in 2015, with Western sanctions looking set to remain in place and low oil prices plaguing the economy, Russia's economic difficulties are far from over.

Impacts

• International relations will continue to help deflect public attention from domestic economic problems for now.
• The value-for-money approach Russian consumers are adopting now is likely to remain after the crisis is over.
• The quality of commonly traded goods will deteriorate as consumers move towards the lower end of product ranges.