Citizens' real incomes are growing, but not their optimism. Therefore, consumer demand will stagnate till the end of spring. But every cloud has a silver lining: with the inflation on the wane, people are getting more inclined to save money. Therefore, in June-July consumer demand might catch up due to a rise in big purchases index.
In Russia, about a half of GDP is spent on personal sunsumption. Starting with 1996, in Russia, like in the majority of the industrialised countries, we regularly measure the aggregate consumer confidence index (the Russian acronym for "consumer confidence index" is IPN). This index makes it possible to forecast short-term changes in the sphere of families' savings and expenses. The project is being carried out by the IPN Fund with support of the Development Centre (since 2000). The consumer confidence index is calculated on the basis of bimonthly polls conducted by the All-Russia Public Opinion Research Centre by using nationwide samples. Separate consumer indexes (the current state index, the big purchases index, etc.) are calculated on the basis of the results of the same polls. Their values may vary from 0 to 200. If the index exceeds 100, it means that positive moods prevail in society, and vice versa.
In March, the consumer confidence index dropped by 2.7 percent (to 91.7 percent), as against the January indicator. A growth in real incomes registered in February (by 4 percent, with the seasonal factor removed) failed to prevent this: it just compensated for the decline in the previous two months. With the seasonal factors out of the way since November till March, the index practically remained unchanged. This is a rather positive signal: last March consumer confidence, even freed from the seasonal factor, worsened considerably as compared with last January.
By the start of spring, Russians felt more misgivings about a rise in unemployment and a fall in industrial production. In March (as compared with January), people were more pessimistic about short-term and medium-term (for the next five years) prospects of the national economy. Consequently, people grew more pessimistic about their personal material prospects: the respective index dropped from 98 to 93, while the aggregate index of consumer expectations fell by 5.6 percent - from 101.1 to 95.4.
Despite a rise in the current state index (which takes into account respondents' opinions about their personal material status and about their chances to make big purchases), people assess their material situation less optimistically: the index of the current personal material status dropped by 2.2 percent (to 85.8 from 87.7 two months before). There were more negative assessments of the current situation because of the loss of additional earnings (the share of respondents who pointed to this reason grew by 20 percent in March) and increased wage arrears. Only elderly Russians could boast of an improvement in their material situation due to the February indexing of pensions.
This spring Russia can expect a certain decline in domestic consumer demand on all expenditure items planned for the next two months. This concerns, above all, real estate, furniture and such goods as automobiles, colour television sets and refrigerators which are bought to improve living standards - to replace old ones or add to them.
However, most probably relative stagnation on the consumer market will not last long. The thing is that, against the background of the total March decline in all constituents of the consumer confidence index, the big purchases index (respondents' assessment of whether conditions for making such purchases are favourable or not) grew to 8.1 percent as against January - from 80 to 86.5. Forecast possibilities of this index make it possible to assume that the shrinking of consumer demand will be replaced by its expansion in three or four months.
Declining consumer activity in conditions of falling inflation prompts Russians to save more. The index of assessing economic conditions for making savings grew by 12.6 percent this March, to 58.1 from 51.6 two months before. At the same time, people's confidence in the banking system is slowly but steadily being restored. Last May, 24 percent of the respondents regarded the opening of an account with the Savings Bank as a reliable form of saving, and 15 percent thought it to be profitable. At present, their share increased to 31 and 21 percent, respectively.