Between December 2023 and January 2024, consumer activity in Russia cooled somewhat, a shift that mirrored a slower rise in consumer prices. Despite this cooling, demand for goods and services remained unusually strong, contributing to ongoing inflationary pressures. This assessment comes from an analyst in the Central Federal District who noted the persistence of overheated dynamics in the economy.
Previously, the head of Russia’s central bank, Elvira Nabiullina, attributed the overheating to a widening gap between available supply and domestic demand. That imbalance kept price pressures elevated even as buyers pulled back in some segments of the market.
The slowdown in household activity was partly tied to a growing sense of savings among Russians. With higher interest rates, credit demand from both households and businesses declined. Yet inflationary pressure persisted because consumer demand remained robust enough to pass increased costs through to prices, particularly where labor market movements fed into wage costs.
In 2023, housing activity reached record levels, with a peak in mortgage issuance and the expansion of government programs designed to support buyers. These policies helped to accelerate the housing market while sustaining overall economic activity.
At the same time, Russia showed signs of increased economic momentum into the early months of the following year. In Central Russia, new pharmaceutical production facilities opened as part of import substitution efforts, signaling a shift toward domestic capacity. The region also saw accelerated growth in clothing manufacturing in the second half of the previous year, with local producers expanding to compensate for the withdrawal of some foreign brands and to meet consumer needs.
Officials noted that higher car prices, maintenance costs, and the emergence of car sharing helped stimulate new activity in the transport sector. The sector also benefited from a rise in winter programming and festivals in Moscow, drawing more visitors to cafes and restaurants and lifting foot traffic across the city’s hospitality venues.
In the Central Bank’s annual trend bulletin, published in the prior year’s What Do the Trends Say study, researchers warned that if imports could not be increased, the Russian economy might slip into a broader overheating phase. On December 29, 2023, First Deputy Prime Minister Andrei Belousov outlined two strategic approaches to cooling the overheating risk: expanding production and curbing demand. These measures aimed to balance growth with price stability while supporting essential sectors through targeted policy actions.
Belousov later highlighted one of the major threats facing the Russian economy: persistent demand outstripping supply, exacerbated by external and internal shocks that could sustain inflationary pressures if left unchecked. The dialogue around policy responses continued as authorities weighed proactive measures to stabilize prices without stalling economic momentum.