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Refrigerators against Inflation
The model of consumption will change drastically in Russian very soon. ING Bank analysts predict that the public's income will continue to rise at a rate of no less than 8 percent per year and Russians' income structure will come to look more like that of residents of other countries. That figure is believable, since Russians' incomes have been rising at 10 percent per year in recent years and changes in consumption are already noticeable.
In 1999, the average Russian spent most of his or her income on food. In 2005, that proportion has shrunk to a third. According to Rosstat, the state statistics service the growth in sales of foodstuffs between January and October of this year slowed down to 9.7 percent, as compared to 10.5 percent in the same period of last year. The growth rate of non-food consumption picked up from 14.7 to 15.1 percent at the same time. ING Bank experts say that that tendency will increase. The share of food in the expenses of Russians will shrink by half to 15 percent of their income by 2013. to match the Western level of 12-15 percent. The share of alcohol in those expenses will shrink only from 1.9 to 1.5 percent, however.
Western consumers spend the largest chunk of their household income (50-60 percent) on services, which make up 70-80 percent of the GDP of developed countries. In Russia, service so far account for only 58 percent of the GDP. Energy prices in Russia are significantly lower than the world average and the state compensates the public for 25 percent of the cost of natural monopolies (which are also services). The liberalization of the natural gas market in Russia by 2011 and full payment of utilities costs will soon cause an upsurge in the share services occupy in the expenses of the public. That share is now about 23 percent. It will rise to 45 percent by 2013. The smaller share of services in household expenses, even if it is a small difference, will lead to greater spending on durable goods (up to a 45-percent share in incomes, compared to today's 23 percent).
Analysts at the European Bank for Reconstruction and Development recently warned that the consumer boom in countries with transitory economies could lead to an overheating of the economy, which is especially dangerous in those countries like Russia where the level of inflation is already high. Deputy Chairman of the Central Bank of Russia Alexey Ulyukaev warned of the same thing and stated yesterday that the Bank will apply pressure to the consumer market to slow down the circulation of money, increase cashless accounts and encourage savings. That will especially reflect on the consumption of durable goods, since the purchase of expensive durable goods encourages savings.
www.commersant.com
All the Article in Russian as of Dec. 12, 2006
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Photo: Roman Yarovitsin
