"At the moment people are saving on purchases in response to their shrinking incomes," Analytical Center expert Alexander Golyashev said on the Good Morning, Russia show on the Russia-1 TV channel.
People should have about 2-3 times their monthly pay set aside for a rainy day
As incomes fall, people have to forgo buying the most expensive products, the analyst explained. "At the same time, the share of groceries in household spending in Russia has increased: while in 2013-2014 it was 47%, in 2015-2016 groceries already accounted for 49% of total household spending," Mr. Golyashev pointed out.
The expert also noted that in 2015 consumers went into the so-called protective mode; when their real income fell by 3%, they cut back spending by 10%. "Seeing that their income was now falling people started buying less, in other words they cut back on their spending much more than their income had actually fallen," Mr. Golyashev explained.
The expert believes that in the current situation the best course of action is to keep one's savings in the bank and that is exactly what many Russians are doing. "People have put money on long-term deposits understanding that the inflation should slow down in the future while they are still going to have money earning interest in the bank," the analyst said. "Those consumers that had enough spare cash in December 2014 spent it on durables, "Mr. Golyashev explained. “Now the only categories of durables whose sales kept rising throughout 2015-2016 are mobile phones."
The analyst is of the opinion that while the dollar is relatively weak relative to the ruble, it would make sense to buy foreign currency, which could then be set aside for a rainy day or spent on travel. "In general, as far as savings are concerned, my recommendation is that people should have 2-3 times their monthly income set aside for a rainy day," Mr. Golyashev advised the viewers.
In early April the Analytical Center published the Personal Consumption of Goods and Services bulletin, which analyzes consumer behavior in Russia in 2016.