Household finances in UK deteriorate at fastest pace for seven months
This was highlighted by a fall in the seasonally adjusted Household Finance Index (HFI) to 42.2, from 42.9 in January.
The latest index reading was well below the 50.0 no-change value and signalled the greatest squeeze on household finances since July 2017.
Strong inflationary pressures continued to have a negative influence on financial wellbeing in February, with cash available to spend falling at the fastest pace for ten months.
At the same time, income from employment increased at the slowest rate since last November, which contributed to another marked reduction in households’ appetite for major purchases.
The latest survey also revealed that 60% of UK households anticipate a Bank of England rate rise within the next six months.
This figure was up sharply from 45% in January, suggesting that consumers are increasingly braced for higher borrowing costs in the months ahead.
February data indicated that UK households remain downbeat about their financial prospects for the year ahead.
At 47.6, the latest index reading was little-changed from 47.7 in January and broadly in line with the degree of pessimism seen over the course of 2017.
Sustained concern about the financial outlook contributed to a sharp drop in households’ appetite for major purchases in February.
At 37.6, down from 38.4 in January, the latest reading was the lowest since July 2017.
Households reported another solid rise in workplace activity during February, which continued the trend seen at the start of 2018.
However, survey respondents indicated another reduction in job security and only a marginal rise in income from employment.
At 50.6, down from 51.3 in January, the index measuring workplace income pointed to the slowest pace of pay growth for three months. ■