Russia consumption to have improved slightly in June

After the shock to real income in Q1 15, Russia's internal consumption has been picking up, driven by slowly improving consumer sentiment and decelerating consumer price inflation. However,June saw a mixed environment for retail sales.

On the one hand, headline CPI inflation drifted down to 0.4% mom, but on the other hand, the ruble lost a huge portion the gains it had made since late March. We forecast retails sales growth of -8.9% yoy (consensus: -8.8% yoy) amid these challenging dynamics (mostly for non-food goods). 

"However, with both the CBR and Rosstat seeing a better outlook for consumer confidence and early signs of a switch from a saving to a consuming regime, the possibility of positive surprises cannot be excluded in the coming months", says Societe Generale.