Millions of Russian consumers who made panic purchases at the end of last year as the ruble plunged now regret their haste as the currency’s 2015 rally leads to lower prices.
Companies such as Apple are reversing last year’s price increases as the ruble strengthens, so consumers would have been better off waiting rather than snapping up imported goods and services in a bet on higher prices down the road.
Andrey Skripnik, for one, played ruble roulette and lost. He hedged against further declines by snatching up flights in December for the vacation he planned in April. Three months later, the 15,000-ruble ($290) tickets were being offered for as little as 8,600 rubles after the currency rebounded.
“I realized that I blew it,” Skripnik, a 31-year-old Muscovite, said upon his return from the trip to Tel Aviv.
The spending spree has drained some consumers’ wallets, adding to this year’s gloom in the Russian retail industry. Retail sales slumped for a third month in March, falling 8.7 percent as real wages fell the most since 1999 amid an economic slowdown and consumer-price inflation that decelerated for the first time in eight months in April.
The ruble gave up as much as 20 percent of its value in a matter of hours mid-December, prompting shoppers to bring forward purchases on concern that further declines would mean only higher prices of imported goods and services. Instead, the currency rebounded. A dollar now fetches about 50 rubles, after rising to a closing peak of 68 rubles from 40 rubles during the fourth quarter.
Natalia Barbashova, a Moscow economist, drained her savings in December to pay 145,000 rubles for a fur coat made from imported mink. A few months later, the same item cost just 115,000 rubles after the ruble’s rally. With that experience behind her, she plans to spend less on branded clothes.
“Lower prices won’t necessarily result in sales growth, they may only curb the decline,” said Ivan Fedyakov, general director of St. Petersburg-based researcher INFOLine. “Russian consumers don’t have a cash cushion anymore, they spent it at the end of last year. People were buying two or three TV sets at once in December, and some of them were later trying to sell them at a discount on a classifieds website.”
For car sellers, the stronger ruble is causing a particular problem as some consumers tear up agreements for new vehicles ordered several months ago, according to Oleg Moseyev, vice president of the Russian Autodealers Association. Among them is Matvei Sumin, a 26-year-old Moscow lawyer who booked a BMW 320 for 1.85 million rubles earlier this year.
“To make this purchase, I need to sell my Audi,” Sumin said. “I put it for sale on the Internet a while ago and still can’t find a buyer.”
State car-loan subsidies are aiding sales, but are unlikely to reverse the slump soon, Moseyev said.
Among companies cutting prices after the ruble’s rebound is Mango. The Spanish fashion brand, which runs more than 150 stores in Russia selling everything from dresses to jackets, cut prices in the country by 20 percent last month. Swiss watch brand Breitling did the same, while Apple reduced the ruble price of the iPhone by about 10 percent.
Cheaper prices may at least help slow inflation and relieve pressure on consumption, said Natalya Kolupaeva, an analyst at ZAO Raiffeisenbank. Consumer prices rose 16.4 percent from a year earlier in April, compared with 16.9 percent in March, the Federal Statistics Service in Moscow said Wednesday. Yet the outlook for spending is still far from bright.
“Even significant price cuts won’t nudge most consumers to buy much more electronics, clothes or delicacies,” said Maria Kolbina, an analyst at VTB Capital. “They simply don’t have the money for this.”