Russians flock to stores to preempt price rises

MOSCOW - Russian consumers flocked to stores Wednesday, frantically buying a range of big-ticket items to preempt the price rises ignited by the staggering fall in the value of the ruble in recent days.

As Russian authorities announced a series of measures to ease pressure on the ruble, which slid 15 percent in the previous two days and raised fears of a bank run, many Russians were buying cars and home appliances - in some cases in record numbers - before prices for these imported goods shoot higher.

The Swedish furniture giant IKEA warned Russian consumers that its prices would rise Thursday, which resulted in weekendlike crowds at a Moscow store on a Wednesday afternoon.

Shops selling a broad range of items were reporting record sales - some have suspended operations, unsure of how far the ruble will sink. Apple, for one, has halted all online sales in Russia.

"This is a very dangerous situation," Russia's leading business daily, Vedomosti, said in an editorial. "We are just a few days away from a full-blown run on the banks."

Alyona Korsuntseva, a shopper at IKEA in her 30s, said the current jitters reminded her of the 1998 crisis, when the ruble tumbled after the government's default on sovereign bonds.

"We want to safeguard ourselves so that things won't be as bad as they were back then," she said.

Consumers are buying durable goods as they are seen as better investments than most Russian stocks. An overwhelming majority of Russians cannot afford to buy land or real estate.

Earlier this week, the ruble suffered catastrophic losses as traders continued to fret over the combined impact of low oil prices and Western sanctions over Russia's involvement in Ukraine's crisis.

Some signs emerged Wednesday that the ruble's free fall may have come to an end and the currency could recover, at least in the short term. After posting fresh losses early Wednesday, the ruble rallied more than 10 percent.

Analysts credited a series of reassuring statements from the Central Bank and the government for the improving ruble backdrop.

First, Deputy Finance Minister Alexei Moiseyev said the government will sell foreign currency from its own reserves "as much as necessary and as long as necessary."

Then the Central Bank announced an expanded series of measures such as giving banks more freedom to increase interest rates on retail deposits and offering them more flexibility to deal with the ruble's depreciation on their balance sheets.

There are fears that the ruble could come under further pressure this week as President Obama is expected to sign legislation authorizing new economic sanctions.

The German government's coordinator for relations with Russia, Gernot Erler, said the economic crisis was largely the result of the drop in oil prices, not the sanctions.

"It's an illusion to think that if the sanctions were to fall away tomorrow, the Russian economy would suddenly be all right again," Erler told rbb-Inforadio on Wednesday.

President Vladimir V. Putin has held back from commenting, saving his thoughts for a Thursday end-of-year news conference.

So far, Putin's popularity remains near record highs. But pollsters warn that economic distress may challenge the high numbers.

"If the economic troubles last a long time, this will be a new situation that Putin's regime has never been in," said Denis Volkov at Moscow's independent Levada polling agency.