OREANDA-NEWS. Sberbank Investment Research, the research department of Sberbank CIB, is publishing its eleventh survey of the pan-Russian consumer, the Sberbank CIB Ivanov Consumer Confidence Tracker, which monitors consumer spending, savings and confidence trends across the country.

The eleventh tracker shows a tentative recovery in the consumer confidence index from the 4Q14 trough of -24% to -22% in 1Q15, primarily due to less gloomy views on national welfare supported by lower ruble depreciation fears and a less dismal perception of the current economic environment.

The main findings of the survey are shown below:
* The index of country wealth over the past 12 months rebounded from -51% in 4Q14 to -36% last quarter. Sberbank CIB associate this mostly with abated fears of ruble depreciation (38% versus 45% in 1Q15) and less glum perception of the current state of the economy (4% fewer respondents believe that the Russian economy is unstable). This also supported personal wealth expectations over the next 12 months that rose from -4% in 4Q14 to -1% last quarter.
* The index of conditions for big purchases fell to -39% (from -22% in 4Q14). This came after the panic in the FX market and subsequent boom in non-food sales in December as people were trying to protect their ruble savings from devaluation. As a result, most of the pent-up demand for durable items was tapped, which coupled with the macro uncertainty and downbeat outlook was reflected in the plunge of the index last quarter.
* The outlook for the ruble changed dramatically in the eyes of Ivanovs as now only 27% expect the Russian currency to continue to weaken (versus 51% in December 2014). Ivanovs keep only 21% of their savings in FX, and 65% of respondents do not currently plan to buy any FX. This is clearly linked to the reduced volatility in the exchange rate and increased attractiveness of ruble deposits amid higher interest rates and increased sum protection offered by deposit insurance.
* Savings data showed normalization after distorting in 4Q14. The share of Ivanovs with no savings was at 37% (in line with 2014 average), while the average share of monthly income saved climbed from 8.3% in 4Q14 to 9.2% in 1Q15, which is in line with the mid-2014 figure. After exuberant spending in 4Q14 in an attempt to protect savings from ruble depreciation, the Ivanovs returned to normal spending patterns.
* The share of price-sensitive respondents rose to 75% in March (versus 73% in December 2014 and 68% a year ago). Accordingly, the Ivanovs are trading down: a record 66% of respondents are trying to save on staples (versus 60% in December and 54% average for 2014), and a net 36% admitted that their non-discretionary consumption patterns degraded over the past quarter (versus a respective 28% in 4Q14). In discretionary spending, a net 45% of respondents plan to cut back on dining out, followed by electronics and household appliances (36%) and vacations (23%), an indication of deterioration from the previous survey.
* The unemployment ratio among our respondents dipped 20 bps Q-o-Q to 10.4%. That said, the labor market remains tight as shown by the net hiring index, which plunged to -44% in 1Q15 (from -37% in 4Q14), as 51% of respondents (versus 43% in 4Q14), said that their employer was cutting staff both through outright layoffs and implicit reduction by attrition. Furthermore, 37% of Ivanovs are afraid of being fired (versus 35% in 4Q14 and 30% in 3Q14). This made unemployment the second biggest concern, which was cited by 46% of respondents (exceeded only by inflation with 67%).
* A share of respondents stocking up on food declined from 22% in 4Q14 to 12% in 1Q15, while in electronics it was 15% and 12% respectively. So the effect of such "defensive purchasing" is disappearing, which should weigh on 2Q15 sales both in food and non-food.
* For the first time since the start of the survey respondents increased the number of chains where they shop from an average 2.3 in 4Q14 to 2.8 in 1Q15. This is an indication of emerged bargain-hunting, confirmed by several retail chains, which are seeing increasing number of shoppers coming to stores solely to buy sale items. Sberbank CIB also saw hypermarkets regaining share from smaller formats, on average households' spent 20.3% of their food budgets in large boxes vs. 19.3% in 4Q14.
* According to Ivanovs' observations, food inflation picked up to 17.8% (below the 23% reported by the State Statistics Service in March) while shelf inflation at public retail chains continued to lag behind (circa 14% for our covered names). Given the record-high price sensitivity, this supports the ongoing traffic migration to public retail chains, which bodes well for their 1Q15 trading updates. Sberbank CIB nevertheless concerned on 2Q15 as intensified trading down and bargain hunting may trigger a price competition even among largest retail chains.

The survey is undertaken by market research agency Cint on behalf of Sberbank CIB and is now conducted quarterly under a methodology that closely mirrors that of the State Statistics Service's quarterly survey and EU confidence assessments. However, the survey is expanded to encompass a wider set of questions relevant to Russia's middle-income consumers. The survey sample is 2,300 people aged 18 to 65 and living in 164 cities with a population of over 100,000 inhabitants. The tracking error is below 2%.