Russian consumer turmoil likely to ease in 2016

Russian private consumption growth continued to be in negative zone through January-October 15, due to demand-side shock's impacts. Loans access to households became very limited with high interest rates.

With high inflation, the weak rouble and freezes in wage also hurt the purchasing power of consumers by rising spending on food and consumption of services was seized up.

Unemployment rate continued at post-Soviet lows throughout the year, hitting 5.6% in October, albeit a slight rise from early 2015.

"However, we do not expect it to rise to the levels seen back in 2009, as the significant devaluation of the rouble is enabling the government to cut fewer public sector jobs. At the same time, the devalued rouble is helping domestic production. We expect service sector jobs to continue shrinking", says Danske Bank in a research note.

RUB's REER dropped 3.4% versus USD, while strengthened 7.3% versus EUR in Jan-Oct 2015, making imports less affordable.

Currently, the market does not expect a rebound in the oil price as in after 2009. The share of imported goods in the consumer basket are likely to shrink further in 2015-16 but should increase marginally in 2017 on a stronger RUB.