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25 Dec, 2008 15:51

Russians spending up for the New Year

A free fall in consumer spending has not hit Russia – at least not when it comes to New Year’s gifts. According to Citibank Russia, holiday spending will top last year’s as consumers prefer credit cards to cash.

Charge it – say an increasing number of Russians when shopping for holiday gifts. That’s according to Citibank Russia, whose annual research shows consumer spending this year is just 2 percentage points lower last year’s. Arina Gavrilova, Analyst with Citibank Russia, says buyers are still out and about, but they are using their cards.

“There is a clear trend that in December – more than in any other month during the year – people tend to pay for their purchases with a credit cards rather than with cash.”

Business Today’s own street pole show the opposite: Most consumers – at least in Moscow – pay cash. ‘Cash’ was the response people were giving when asked how they paid, with additional comments like ‘During the crisis we don’t keep money in the bank’ and ‘I get paid in cash too.’

Despite the crisis, Arina Gavrilova says the biggest holiday of the year prompts many Russian to splurge, even if more selectively.

“Computers and electronics, as well as cell phones, are not selling as well as last year. Most Russians turn to cosmetics and perfumes, alcohol and jewelry as their main choices.”

Most experts expect consumer spending to slump in January as Russians struggle to pay off debts as their household incomes fall. The number of non-performing loans has already jumped from under 1% to 4% over the past few months. And it’s likely to keep rising: Between October and November some 80,000 Russians suddenly lost their jobs, according to official statistics.