Russians go on shopping splurge as ruble plunges

Russians go on shopping splurge as ruble plunges
Russia's Prime Minister Dmitry Medvedev (R) speaks during a meeting on the financial and economic situation with Central Bank Chairman Elvira Nabiullina (L), Finance Minister Anton Siluanov (2nd L) and Deputy Prime Minister Igor Shuvalov (3rd L) in the suburban residence "Gorki" outside Moscow on December 16, 2014.

MOSCOW - Russians are feeling the pinch from the slumping ruble, but one somewhat paradoxical result has been to unleash a spending spree as consumers snap up electronics, furniture and cars before prices soar.

In general, Russians' spending power has gone down with the ruble -- which this week hit a record low against the dollar and has lost more than half of its value against the euro due to falling oil prices and Western sanctions over Ukraine. In addition, inflation is forecast to soon climb above 11 per cent.

But for those with savings who were planning to buy big-ticket imported items, now is the time to hit the shops, before prices go up drastically to reflect the new cost of imports. And for Moscow's large stores and malls, it is boom time.

In an Ikea shop on a weekday afternoon, the section selling fitted kitchens -- the highest-priced items in the store -- was packed with customers. Ikea has announced that it will put up its prices for kitchens and other goods on December 18.

At a peak time for shopping ahead of the New Year, the country's main holiday, "the number of people in the stores has gone up also because of prices going up", the Swedish chain, which has annual turnover in Russia of more than one billion euros ($1.25 billion), said in a statement sent to AFP.

Ikea had previously promised to keep its prices the same for 2014, but the chain then explained it "could not be independent from external factors".

Apple in late November upped its prices in Russia by 20 per cent, without warning, after its products had suddenly become cheaper than in Europe, an opportunity that some canny consumers spotted.

Interest rates have shot up from 5.5 per cent at the beginning of this year to 10.5 per cent on Thursday and then 17.5 per cent on Tuesday, but the central bank has not been able to keep a ceiling on inflation nor a floor under the ruble.

Many Russians are experiencing deja vu -- they have lived through several serious economic crises in the last 25 years, when many saw their savings go up in smoke.

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