Spending amongst Russian shoppers is set to drop over the Christmas period as a post-invasion boom in the economy loses momentum. The 2022 invasion of Ukraine saw defence spending balloon and significant competition for workers amid a declining pool of labour fuelled by increased military recruitment.
As a result, wages jumped sharply, allowing households across the country to spend more than they had historically been able to. However, as the war approaches its fourth anniversary, wage growth has stagnated, whilst demand in the labour market has stalled, leaving workers thinking twice before making purchases, according to the central bank report. The report said: « According to retailers across the country, an increasing share of products are being purchased during promotions, sales, and discounts.
“Household behavior has become more frugal.”
Economic conditions have seen a decline in the number of people purchasing high-ticket, non-essential items, signifying a sharp decline following the boom of 2022.
The report added: « More subdued consumption may indicate a gradual reduction in labor market overheating and more moderate expectations for future income dynamics.”
A dip in consumer habits has coincided with a steep drop in oil and gas revenues, something the Russian state relies on heavily to subsidise its defence spending and cover the cost of everyday spending.
It is also an important means of allowing President Vladimir Putin to pour money into the war effort against Ukraine without worsening inflation for everyday people and avoiding a currency collapse.
According to official figures, the country saw a fall of 34% in its oil and gas revenue year-over-year in November.
The importance of raking in oil and gas revenue despite international sanctions to starve Moscow of vital funds has seen the European Union place sanctions on five businessmen linked to Russian state-owned oil companies Lukoil and Rosneft and targeted companies accused of circumventing sanctions on Russian oil by running ships for Moscow’s shadow fleet of aging oil tankers.
Member countries, notably France, have vowed to crack down on the sanction-busting shadow fleet which experts estimate numbers more than 400 ships. They are also trying to secure deals with flag-carrying countries to make it easier to board the vessels.
EU headquarters said the businessmen “control vessels transporting crude oil or petroleum products, originating in Russia or being exported from Russia, concealing the actual origin of the oil, while practising irregular and high-risk shipping practices”.
The four shipping companies targeted are based in the United Arab Emirates, Vietnam and Russia. A statement said they own or manage shadow-fleet tankers under sanctions and which transport oil “while practising irregular and high-risk shipping practices”.
The sanctions, which were agreed at a meeting of the 27-nation bloc’s foreign ministers in Brussels, involve mostly asset freezes and travel bans.
The EU move adds to growing pressure on the shadow fleet. Last month, Ukraine used domestically produced Sea Baby naval drones to strike two more Russian oil tankers in the Black Sea. Both were under international sanctions.
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