March 21, 2018 / 2:54 PM / a month ago

UPDATE 1-Russia retail sales miss expectations, wages beat f'cast

 (Combines with other economic data; adds quotes, detail)
    By Andrey Ostroukh
    MOSCOW, March 21 (Reuters) - Growth in Russia's retail
sales, a gauge for economic expansion, slowed in February amid a
higher-than-expected increase in wages, painting a mixed picture
for the oil-dependent economy, data showed on Wednesday.
    The Russian economy is on the mend after two years of
recession, caused by a slump in oil prices and Western
sanctions. But the pace of recovery lacks momentum, speaking for
more cuts to the central bank rates to kick-start lending.
    Retail sales, a barometer of consumer demand and Russia's
key economic growth driver, rose 1.8 percent in February
compared with a year ago after rising 2.8 percent in the
preceding month.
    Analysts polled by Reuters had on average predicted that
retail sales would rise by 3 percent in February.
    "Perhaps the most disappointing figure came from the retail
sector," Capital Economics research firm said in a note.
     At the same time, real wages, which are adjusted for
inflation, rose 9.7 percent year on year in February, beating
analysts' call for a 6.0 percent increase.
    Such figures suggest there was a substantial money injection
in the budget salary fund ahead of the election, Kirill
Tremasov, a former head of macroeconomic forecasting department
at the economy ministry, said in his Telegram channel.
    "But for some reason this has not impacted demand," Tremasov
    Russian media had reported that state employees,
particularly in the healthcare, saw salary increases earlier
this year, before the presidential election on March 18 where
President Vladimir Putin secured another term.    
    Amid skidding economic recovery and a record-low inflation,
the central bank is widely expected to trim its key rate as soon
as this week, making lending cheaper and thus boosting gross
domestic product expansion.
    "Weak real retail growth figure suggests that a salary
increase has not affected consumer spending, which becomes the
main negative surprise," said Alexei Pogorelov, chief economist
at Credit Suisse in London.   
    Such a combination of indicators speaks for a 50 basis point
cut to the central bank's key rate, which is now at 7.5 percent,
Pogorelov said.
    Unemployment rate also surprised by sliding to 5.0 percent
in February, below a rate of 5.2 percent predicted in the
Reuters monthly poll.
    Rosstat provided the following data:     
 RETAIL SALES              Feb 18     Jan 18     Feb 17
     mth/mth pct change    -3.6       -25.0      -1.7 
     yr/yr pct change      +1.8       +2.8       -2.6 
    NOTE - For key Russian indicators click here.

 (Additional reporting by Polina Nikolskaya and Zlata Garasyuta
Writing by Andrey Ostroukh)
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