Key Points
Russia New Year spending slowdown has emerged as one of the clearest signals yet of how deeply prolonged economic pressure is reshaping household behavior, even as headline inflation shows signs of easing. As the country closes out 2025, official data points to slower price growth and falling costs for some everyday staples. Yet on the ground, many Russians are choosing restraint over celebration, scaling back traditional holiday purchases and rethinking how they spend during the most important retail season of the year.
The disconnect between improving inflation figures and cautious consumer sentiment underscores the broader challenges facing Russia’s economy as it enters 2026: high interest rates, slowing growth, lingering sanctions, and persistent anxiety about future costs.
What happened: Inflation cools, spending does not rebound
According to official expectations, Russia’s inflation rate is set to fall below 6% in 2025, a notable improvement from 9.5% recorded in 2024. For policymakers, this marks progress after a period when price growth surged and eroded purchasing power. For consumers, however, the relief has been limited.
In cities and towns across the country, many households have reduced New Year spending despite lower prices for certain staples. Interviews conducted by Reuters in Moscow and surrounding areas show families opting for simpler meals, cheaper ingredients, or smaller celebrations altogether.
This Russia New Year spending slowdown is especially striking given the cultural significance of the holiday. New Year’s Eve traditionally drives strong demand for food, gifts, and festive goods, often surpassing other seasonal events in economic importance. Instead, 2025 has brought a noticeably more restrained mood.
Why this is happening now
Several forces are converging to keep spending in check.
First, inflation may be slowing, but it has come at a steep economic cost. Russia’s central bank has kept its key interest rate at its highest level since the early 2000s for nearly half of 2025. High borrowing costs have weighed on investment, credit availability, and overall economic momentum. As growth slows, households remain wary about future income stability.
Second, the economic impact of the war in Ukraine continues to ripple through daily life. Nearly four years after Russia’s invasion in February 2022, sanctions imposed by Western countries remain firmly in place. These measures, layered on top of sanctions first introduced after Russia’s annexation of Crimea in 2014, have reshaped trade flows, limited access to certain imports, and constrained long-term growth prospects.
Third, inflation expectations remain stubbornly high. While some prices have fallen, consumers tend to remember sharp increases more vividly than gradual declines. A central bank official acknowledged this psychological gap, noting that people often notice price hikes while overlooking reductions. Planned tax increases at the start of 2026 have further weighed on sentiment, reinforcing caution rather than confidence.
The cost of tradition: A closer look at household spending
One of the clearest examples of this dynamic is the cost of ingredients for Russia’s most popular New Year salad, a staple of holiday tables across the country. Government efforts to curb price growth have focused on essentials such as potatoes and eggs, with prices falling by 22% and 20% respectively in 2025.
Despite these declines, the overall cost of preparing the salad is still expected to rise by about 5% this year, according to calculations by RIA Novosti based on median prices. That increase is smaller than the 8.5% rise recorded in 2024, but it remains an increase nonetheless.
For pensioners and lower-income households, even modest price growth can influence behavior. Many are choosing cheaper alternatives or simpler menus, prioritizing necessities over tradition. For others, the adjustment is more subtle but no less telling: fewer premium items, smaller quantities, and a greater reliance on discounts.
High-end holiday treats have been among the first to go. Red caviar, a popular New Year delicacy, has been widely cited as too expensive for many families this year. Its absence from holiday tables has become a symbol of how consumers are recalibrating expectations.
Business impact: Retailers feel the shift
For businesses, the Russia New Year spending slowdown carries important implications.
Retailers typically rely on the holiday season to offset weaker sales earlier in the year. Slower New Year demand squeezes margins and complicates inventory planning, especially for food retailers and specialty sellers that stock seasonal products. While stable prices help manage costs, they do not guarantee higher volumes.
Some businesses have responded by emphasizing discounts and promotions, while others are adjusting product mixes toward more affordable options. Online shopping has also gained traction, as consumers seek lower prices and compare deals more easily. This shift benefits e-commerce platforms but pressures traditional brick-and-mortar stores, particularly smaller retailers with limited pricing flexibility.
For producers and suppliers, subdued consumer demand limits their ability to pass on costs, reinforcing a low-growth environment even as inflation cools.
Market and economic impact
At the macro level, restrained consumer spending adds to concerns about economic momentum. Household consumption is a key driver of growth, and caution during peak spending periods signals broader weakness.
The persistence of high interest rates, while effective in slowing inflation, continues to weigh on economic activity. With inflation expectations still elevated, the central bank faces a difficult balancing act: easing too soon risks reigniting price pressures, while staying tight for too long risks deepening the slowdown.
Public sentiment data reinforces these challenges. A December poll by the independent Levada organization found that 34% of respondents ranked rising prices and taxes as the most important event of 2025, ahead of major geopolitical developments. That perception gap highlights how economic concerns dominate daily life, regardless of official inflation trends.
What this means for investors
For investors, the Russia New Year spending slowdown offers insight into domestic demand trends and consumer resilience.
Companies tied closely to household consumption may continue to face muted revenue growth, particularly in discretionary categories. Essential goods producers benefit from price stability but may see limited volume expansion. Retail and consumer-facing businesses must navigate a cautious customer base that prioritizes value over variety.
More broadly, persistent consumer caution underscores the structural headwinds facing Russia’s economy: sanctions, high rates, and uncertain fiscal policy. While inflation data may improve headline indicators, underlying demand conditions remain fragile.
Impact on consumers
For consumers themselves, the slowdown reflects a pragmatic response to uncertainty. Many households are adjusting spending habits not because prices are rising sharply today, but because they are unsure what tomorrow will bring.
The emphasis on cheaper alternatives, online shopping, and simplified celebrations points to a broader shift in behavior that may outlast the holiday season. Even if inflation continues to ease, rebuilding confidence will take time, particularly if taxes rise in 2026 and borrowing costs remain high.
Looking ahead
The Russia New Year spending slowdown illustrates a critical lesson for policymakers and businesses alike: lower inflation alone is not enough to revive consumer confidence. Households respond not just to current prices, but to expectations about income, taxes, and economic stability.
As Russia moves into 2026, the challenge will be translating price stability into renewed demand without undermining progress on inflation. Until that balance is achieved, cautious spending is likely to remain a defining feature of the consumer landscape, even during moments traditionally marked by celebration.
