After the shock to real income in Q1 15, Russia's internal consumption has been picking up, driven by slowly improving consumer sentiment and decelerating consumer price inflation. However,June saw a mixed environment for retail sales.



On the one hand, headline CPI inflation drifted down to 0.4% mom, but on the other hand, the ruble lost a huge portion the gains it had made since late March. We forecast retails sales growth of -8.9% yoy (consensus: -8.8% yoy) amid these challenging dynamics (mostly for non-food goods).



"However, with both the CBR and Rosstat seeing a better outlook for consumer confidence and early signs of a switch from a saving to a consuming regime, the possibility of positive surprises cannot be excluded in the coming months", says Societe Generale.