Russia’s wartime consumer boom is cracking as shoppers tighten their wallets

• Russian shoppers are slamming the brakes, a warning sign for the wartime economy.
• The central bank reports fading demand, slowing wage growth, and increasingly nervous households.
• With oil and gas revenues sliding and the labor market cooling, Russia's economic engine is sputtering.

After years of wartime splurging, Russian shoppers are tightening their grip on their wallets — a shift that hints at growing stress in the country's economy.

Growth in consumer spending has weakened across most regions, the Central Bank of Russia said in a report published Wednesday.

In October and November, demand softened even as unemployment remained near historic lows and inflation expectations ticked higher.

"According to retailers across the country, an increasing share of products are being purchased during promotions, sales, and discounts. Household behavior has become more frugal," according to the central bank report.

Retailers in many regions report weakening demand for big-ticket and nonessential goods, marking a clear cooling after the post-2022 consumer boom.

"More subdued consumption may indicate a gradual reduction in labor market overheating and more moderate expectations for future income dynamics," wrote Russia's central bank.

Russia's wartime boom is losing momentum

It's a notable shift for an economy that witnessed a boom in consumer spending after Russia's full-scale invasion of Ukraine in February 2022, even amid sweeping sanctions against Moscow.

That boom was fueled by surging defense spending and intense competition for scarce workers. Wages jumped, and many households went on spending sprees.

Now, that momentum appears to be fading.

Wage growth has slowed, and firms across multiple regions report reduced manpower demand and less urgency to hire, reflecting a cooling labor market, according to the central bank report.

Many firms told the central bank they expect even more modest wage increases in 2026, suggesting that households may be bracing for leaner times.

The central bank's latest report arrives as Russia's full-scale war in Ukraine approaches its fifth year, and the limits of wartime economic stimulus become more apparent.

Oil and gas revenues — the backbone of Russia's budget — dropped 34% year-over-year in November.

Even before this, analysts had warned that Russia's economy was being sustained largely by defense spending, subsidies, and emergency policy interventions.

Top officials had sounded alarms. In December 2023, Elvira Nabiullina, Russia's central bank governor, warned that the economy was at risk of overheating.

Last June, the head of Russia's largest bank said the economy was "definitely and strongly overheated."

Meanwhile, a deepening demographic crisis and ongoing competition for labor between the military and industry continue to weigh on Russia's growth prospects, both now and in the years ahead.