5 Oct 2018 13:54

Demand for non-food goods rises in anticipation of VAT hike - Central Bank

MOSCOW. Oct 5 (Interfax) - The rise in consumer demand for non-food goods is coming from anticipation of a rise in prices after the VAT hike from 18% to 20% in 2019, the Central Bank said.

"A steady growth in consumer demand continued in August. Purchases of non-food goods increased most notably. The annual rise in retail trade turnover in August was 2.8%, including 4.1% for non-food goods. The annual increase in sales of non-food good was significantly lower (1.3%), while the monthly sales volume comparison remained on the level of June-July 2018. The increase in demand for non-food goods was mainly driven by an expected increase price growth for them due to the weakening of the ruble and the up-coming VAT increase," the regulator said in comments on the economy.

A September inFOM survey showed that in August-September respondents' expectations of ruble depreciation increased, and the exchange rate and VAT were cited more often as among the factors for inflation expectations, which points towards inflation risks.

"Against this backdrop, respondents consider the present moment as the most appropriate for making major purchases. The expansion of lending is supporting consumer demand, while weak real disposable incomes, in spite of a rise in real wages, could hold back the increase in household expenditure on consumption somewhat," the comments said.