Russian families rush to shop with fast-weakening rouble
March 5 (Reuters) – In bright sunshine, a long queue of shoppers snaked outside an IKEA store near Moscow this week. Similar scenes were repeated elsewhere as Russian families rushed to spend the fast-depreciating rouble and so rush to shop at the Swedish retailer which is exiting the crisis-hit country.
Russians are bracing for an uncertain future of spiraling inflation, economic hardship and an even sharper squeeze on imported goods.
The rouble has lost a third of its value this week after unprecedented Western sanctions were imposed to punish Russia for invading Ukraine. The moves froze much of the central bank’s $640 billion in reserves and barred several banks from global payments system SWIFT, leaving the rouble in free-fall.
Cities across Russia were outwardly calm, with little sign of the crisis devastating financial sector and markets. Except for the lines of people looking to stock up on products – mostly high-end items and hardware – before shelves empty or prices climb further.
“The purchases that I planned to make in April, I urgently bought today. A friend from Voronezh also told me to buy for her,” shopper Viktoriya Voloshina told Reuters in Rostov, a town 217 kilometers (135 miles) from Moscow.
Voloshina said she was looking for office shelves and tables and also shopping on behalf of a friend from another town. “My heart is breaking,” she added.
Dmitry, another Moscow resident, lamented rapid price rises.
“The watch I wanted to buy now costs around 100,000 rubles, compared to 40,000 around a week ago,” he said, declining to give his surname.
But the spending burst visible this week may peter out.
While there is no palpable sign of panic, the wipe-out of rouble savings and the doubling of interest rates to 20% will squeeze mortgage holders and consumers.
Financial conditions — reflecting availability of credit in the economy — have tightened brutally this year, which Oxford Economics predicted would shrink domestic demand by 11% by year end and raise unemployment by 1.9 percentage points in 2023.