Doubts About Russia's Growth: Consumer Spending Is Now Also Growing at a Slower Pace

October 5, 2026 · 20 min read · By Klaus Dormann · Original (German)

Author: Klaus Dormann

According to the Ministry of Economic Development, Russia’s total economic output rose by 0.8% in August compared with the same month a year earlier, slightly more than in July (+0.6%). In the first eight months, real gross domestic product was 0.6% higher than a year ago. The Russian government expects this growth rate to hold for the full year 2026 as well.

On September 24, while presenting the government’s new economic forecasts through 2029, Economy Minister Maxim Reshetnikov emphasized that consumer demand is the “backbone” of Russia’s economic growth. According to the forecast, total retail sales will rise by 4.6% in real terms in 2026. Real wage growth this year is expected to reach 4% (Reuters). Doubts about this are growing. Consumer spending has slowed significantly during the summer months. In August, real total sales in retail, services, and the restaurant industry—calculated by the Ministry of Economic Development as an indicator of “consumer activity”—grew by only 2.9 percent year-over-year, down from 4.6 percent in July and 6 percent in June, Kommersant warns.

Deputy Prime Minister Alexander Novak also pointed out a number of risks to economic development in a speech before the Federation Council last week. Among the “external risks,” he cited a slowdown in global growth, the regionalization of world trade, and further sanctions. Novak cited an unexpectedly long period of restrictive monetary policy and a labor shortage as “internal risks” (Finmarket.ru). However, these risks have been factored into the forecasts.

Zabotkin: Russia Is Returning to Its Long-Term Growth Trend

Alexey Zabotkin, Deputy Chairman of the Russian Central Bank, expressed relative confidence regarding the outlook for the Russian economy on the sidelines of an Alfa-Bank event on October 1. He noted that annual growth rates in most sectors would have bottomed out by late 2025 or early 2026. Overall, growth figures in most basic industries and in aggregate economic output in 2026 would be “moderate, but positive.”

According to Zabotkin’s assessment, economic growth will return to its long-term trend starting in 2027—provided no further major shocks occur. The real GDP growth rate that Russia has achieved over the past 10 to 15 years stands at about 2% per year. For the economy to grow faster, labor productivity and overall productivity must increase, Zabotkin emphasized (Interfax).

President Putin: Growth Was Slowed to Reduce Inflation

On October 1, at the 23rd meeting of the Valdai International Discussion Club, President Vladimir Putin acknowledged that, as in every country, Russia faces economic challenges. Putin explained that Ukrainian attacks on Russian oil refineries had led to a loss of about one percent of gross domestic product (Deutsche Welle; Meduza). He conceded that the Ukrainian attacks had thus partially achieved their goal of damaging the Russian economy. Russia is retaliating with attacks on targets of strategic importance to Ukraine. One consequence, he said, is the virtual standstill of production in the Ukrainian metal industry (English translation of Putin’s speech published by the Presidential Administration, with video: en.kremlin.ru).

At the same time, the president emphasized at the Valdai Club that Russia had succeeded in significantly reducing inflation. The government had deliberately slowed economic growth to combat inflation.

“We had double-digit inflation—10.5% last year—and just over six percent this year. Almost half, you see?”

This is, of course, a positive result, Putin said. However, over the course of 2026, the inflation rate stagnated at around 6 percent (TradingEconomics: March 2025: 10.3%; August 2026: 6.3%; Merkur.de: “Price Spiral Hits Russia Hard After Duma Election,” Sept. 28, 2026).

The president emphasized that the most important thing now is to avoid cooling the economy too much (Interfax.com; Finam.ru). What role does spending on the Russian military play in this? Will the budget deficit—which rose more sharply than expected in 2026—continue to increase next year?

Russia’s increased budget deficit is expected to decline significantly in 2027

Vasily Astrov, a Russia expert at the Vienna Institute for International Economic Comparisons (WIIW), expects that Russia will allocate between 7.5 and 8% of its economic output to military spending in 2027. He told the Handelsblatt that this development is “not a massive increase.” According to the draft budget, the government budget deficit is expected to fall from 3.2 percent of GDP in 2026 to 2.2 percent in 2027. “The central message of the draft budget is consolidation,” Astrov said in Handelsblatt+ (see also Frankfurter Rundschau).

President Putin referred to the planned reduction in the budget deficit at the Valdai Club, stating: “This year’s budget deficit stands at around 3% of GDP; next year it will certainly be 2%.” He added that Russia’s national debt amounts to about 17% of GDP, a low debt-to-GDP ratio by international standards.

Putin’s conclusion at the Valdai Club: The Russian economy and financial system have proven resilient. The overall economic situation is “stable.” According to TASS, Putin stated:

“Everyone thought our society would fall apart, that the economy and the financial system would collapse, but we are facing something we did not expect.”

“We did not anticipate such cohesion and courage in Russian society, nor the stability of the financial system and the Russian economy.”

“Nothing will be nationalized”—Putin assures

During the discussion at the Valdai Forum, President Putin also commented on the Russian government’s decision to place some subsidiaries of Western companies in Russia under so-called “temporary administration” (analysis by the German-Russian Chamber of Foreign Trade). Among those affected is the Düsseldorf-based food wholesaler Metro AG (Telepolis: Russia Takes Control of Metro, Oct. 1, 26; russland.capital: Metro in Russia: The CEO Stays, Control Changes Hands, Sept. 29, 26; DLF interview with Vasily Astrov).

Putin explained that Russia had merely responded to the West’s seizure of Russian assets with these measures. The president assured that the assets of Western companies could be returned to the companies “in a favorable scenario.” Russia “is not taking anything away from anyone, stealing anything, or nationalizing anything,” Putin said. When asked whether the affected assets would be returned in a “favorable scenario,” he replied: “Yes, they will get them back” (Market Screener, news.de; Oct. 2, 26).

Industry has not contributed to weak GDP growth so far

According to calculations by the Russian Ministry of Economic Development, the annual increase in Russia’s total economic output accelerated from 0.6% in July to 0.8% in August 2026. In the first eight months of 2026, real gross domestic product was thus 0.6% higher than last year (see also the table at the end of the article).

Industrial production, however, did not contribute to this weak growth. Overall, it stagnated at the previous year’s level from January through August. In August, total industrial production fell by 0.6% year-over-year, following a 0.4% increase in July (Finmarket.ru).

Within the industrial sector, production in the “manufacturing industry” was 0.5 percent lower in August than a year ago (January through August: +0.4%). Production in the “mining and extraction of raw materials” sector fell by 1.3% year-over-year in August (January through August: -1%).

How did industrial production fare on a seasonally and calendar-adjusted basis?

Compared to the previous month of July, industrial production in August, adjusted for calendar and seasonal factors according to Rosstat data, fell by 0.4% (see the red line in the following figure from the monthly report on industrial production trends by the Moscow-based research institute “Center for Macroeconomic Analysis and Short-term Forecasting, CMASF”). The increase in industrial production seen in July and June was thus lost. However, the CMASF considers it premature to speak of a “negative trend.”

According to the CMASF’s own calculations, seasonally adjusted industrial production in August fell by only half as much as in July—0.2% (see blue line). This marked a continuation of the decline that began in May. However, the CMASF currently estimates the level of industrial production in Russia to be slightly higher than Rosstat does.

The CMASF also calculates an index for production in the “civil” sectors of industry, excluding the petroleum industry (purple line). Here, production stagnated in August at the level reached in the previous month.

Industrial production according to Rosstat data and CMASF estimates
(seasonally adjusted, monthly average for 2021 = 100)

Liniendiagramm: saisonbereinigte Industrieproduktion in Russland laut Rosstat und CMASF-Schätzungen sowie zivile Branchen ohne Erdölindustrie, Index 2021 = 100, bis August 2026

red line: Total industry (Rosstat)
blue line: Total industry (CMASF)
purple line: Civil industrial sectors excluding the oil industry (CMASF)*

* Production of metal products not included in other groups; computers, electronic, and optical products; aircraft; other vehicles not included in other groups

CMASF: Industrial Production in August, September 29, 2026

Growth in household consumption is slowing significantly

The Russian Ministry of Economic Development calculates an indicator for total real household consumption based on Rosstat data on the development of real sales in retail, services, and the food service industry. In June 2026, it was still 6 percent higher than in the previous year. In July, growth slowed to 4.6%. In August, at 2.9%, it was only about half as high as in June.

However, from January through August 2026, year-over-year growth for this “consumer activity” indicator still reached 4.5 percent. Kommersant notes that, according to the Ministry of Economic Development’s new forecast, private consumption will rise by 4.1 percent in 2026 as a whole (significantly more than the 1.2 percent the ministry had projected in its May forecast).

However, private consumption continued to weaken over the course of September. This is shown by data from the SberIndex: From September 21 to 27, real consumer spending was only 1.2% above the previous year’s level, compared with 1.4% the previous week and 5.7% in August 2026 (see the following Kommersant chart).

Trend in Consumer Spending According to the SberIndex
: Year-over-Year Changes in Percent

Purple line: nominal consumer spending
; green line: real, inflation-adjusted consumer spending

Diagramm: Veränderung der nominalen und realen Konsumausgaben in Russland laut SberIndex gegenüber Vorjahr in Prozent, wöchentlich bis 27. September 2026, Quelle Kommersant

Kommersant; Artem Chugunov: Private consumption continues to weaken, Oct. 1, 26

Raiffeisenbank: An Unusually Sharp Decline Following Stable Growth

Stanislaw Muraschow, chief economist at Russia’s Raiffeisenbank, also points out that consumer spending on a wide range of products fell in August for the first time in a long while. He writes:

“For example, seasonally adjusted sales in the food retail sector fell by 0.9% compared to the previous month (previously, growth had been recorded since February 2026).

The non-food sector contracted for the second month in a row, but this time the trend is driven not by automobile sales but by other goods (particularly clothing and shoes, electronics, household goods, pharmaceuticals, etc.).”

Raiffeisenbank has published the following chart to illustrate this. The green line shows how, according to the bank’s estimates, total retail sales have developed on a seasonally adjusted basis compared to the previous month. This overall trend is compared with the trend in retail sales excluding the automotive sector (black line).

Consumer demand has fallen,
though not due to a decline in car sales
Seasonally adjusted sales; month-over-month in %

Diagramm: saisonbereinigter Einzelhandelsumsatz in Russland gegenüber Vormonat in Prozent, insgesamt und ohne Pkw-Handel, bis August 2026, Quelle Raiffeisenbank

green line: total retail sales; black line: retail sales excluding the automotive sector

Raiffeisenbank; Stanislaw Muraschow:
Consumer Spending: A Temporary Slump or the Beginning of a Soft Landing? Oct. 2, 26

Muraschow considers such a sharp month-over-month decline in consumer spending as seen in August to be unusual following a period of stable growth. He notes that it is reminiscent of the situation in late 2025/early 2026, when consumer spending fluctuated extremely sharply. He therefore considers it premature to speak of a “soft landing” for consumer spending. This would require both a reduction in consumer lending and a slowdown in wage growth. However, the likelihood of a “soft landing” remains high.

Real wages continued to rise strongly amid persistently low unemployment

According to Rosstat, real wages in July 2026 were still up 3.3% year-over-year, slightly weaker than in June (+3.4%). In the first seven months, real wages were 6% higher than in the previous year. In nominal terms, they rose by 12.2%.

The unemployment rate stood at 2.2% in August, remaining at the same level as for the entire period from January through August 2026.

Denis Popov: Moderate GDP growth will continue to be driven by consumption in 2026

In his analysis of the August data, PSB Bank’s chief analyst, Denis Popov, notes that while the slowdown in real wage growth is likely to continue for the remainder of 2026 given the persistently rising inflation rate, However, private consumption will remain the main driver of growth. The Russian economy is expected to post “moderate but positive growth” by the end of the year. The current acceleration in economic growth (an increase in the annual growth rate from 0.6% in July to 0.8% in August) allows the central bank to delay further cuts in the key interest rate.

Popov summarizes the August economic data as follows:

The slight acceleration in overall economic output to 0.8% in August was unexpected given the decline in industrial production (the largest sector of the economy), particularly due to the relatively weak performance in wholesale and retail trade, two sectors that also account for a significant share of GDP.

Wholesale sales declined in August for the first time since the first quarter (-0.5% year-over-year compared with +0.4% in July).

Annual growth in retail sales slowed significantly (+3.3% year-over-year in August compared with +5.3% in July).

The drivers of GDP growth in August were sectors that had recorded relatively weak growth since the beginning of the year: the construction industry (+2.7%), agriculture (+6.6%), and freight transport (+4.2%). It is still too early to draw conclusions about the sustainability of this growth. Given this year’s good harvest, only agriculture is likely to be able to continue its positive trend. However, given the deteriorating export prospects for agricultural products, an improvement in the financial situation in this sector is unlikely.

Russian Ministry of Economic Development: Growth of real gross domestic product and production in key sectors; year-over-year changes in percent

Tabelle des russischen Wirtschaftsministeriums: Veränderung des realen BIP und der Produktion wichtiger Branchen gegenüber Vorjahr in Prozent, Januar bis August 2026

Finam.ru: According to data from the Ministry of Economic Development, Russian GDP grew by 0.8% in August and by 0.6% from January through August; excerpt from the table; September 30, 26

Doubts About Russia's Growth: Consumer Spending Is Now Also Growing at a Slower Pace

Zabotkin: Russia Is Returning to Its Long-Term Growth Trend

President Putin: Growth Was Slowed to Reduce Inflation

Russia’s increased budget deficit is expected to decline significantly in 2027

“Nothing will be nationalized”—Putin assures

Industry has not contributed to weak GDP growth so far

How did industrial production fare on a seasonally and calendar-adjusted basis?

Growth in household consumption is slowing significantly

Raiffeisenbank: An Unusually Sharp Decline Following Stable Growth

Real wages continued to rise strongly amid persistently low unemployment

Denis Popov: Moderate GDP growth will continue to be driven by consumption in 2026

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