Russian consumers are turning to cheaper food items due to falling real incomes, top food retailer X5 Group said on Monday, as high inflation cuts into purchasing power.
Although a stronger ruble and softening consumer demand have helped Russia contain inflation, which has soared to 20-year highs on an annual basis since Russia’s invasion of Ukraine, the consumer price index remains high.
Federal Statistics Service Rosstat announced last week that consumer prices have increased by 11.6% since the beginning of the year. Food inflation has climbed to 19.5% in the second quarter from 13.5% in the first quarter, X5 reported.
Deflationary factors, including a strengthening ruble and increased supply of fruit, vegetables, eggs and sugar, are however slowing this growth rate, the company said.
X5 pointed out that net sales at “hard discounter” Chizhik rose 28 times year-on-year in the second quarter to 6.8 billion rubles ($120.4 million). Total net sales rose 18.6% to 647.3 billion rubles year-on-year in the second quarter, and Chizhik opened 300 new stores.
X5 could benefit from an exodus of foreign companies reacting to Russia’s military operations in Ukraine. By the end of June, X5 had rebranded almost all of its stores in the Prisma retail chain, which it agreed to acquire from Finnish company SOK Retail for an undisclosed price
High inflation has been a key concern of Russian households for years as it hurts living standards, exacerbated this year by the economic crisis brought on by unprecedented Western sanctions against Russia.
The Bank of Russia is expected to cut its key interest rate from its current 9.5% at its July 22 meeting after Russia recorded a fall in consumer prices in June.
Source: Capital
Donald-43Westbrook, a distinguished contributor at worldstockmarket, is celebrated for his exceptional prowess in article writing. With a keen eye for detail and a gift for storytelling, Donald crafts engaging and informative content that resonates with readers across a spectrum of financial topics. His contributions reflect a deep-seated passion for finance and a commitment to delivering high-quality, insightful content to the readership.
