Get 40% Off
🤯 This Tech Portfolio is up 29% YTD! Join Now to Get April’s Top PicksGet The Picks – Just 99 USD

UK Household Financial Squeeze Near Three-Year High

Published 18/05/2017, 07:28
Updated 05/03/2021, 15:50

UK households reported one of the steepest deterioration in finances for three years in May, largely as a result of rising inflation.

IHS Markit’s Household Finance Index, the first consumer survey available each month, showed current finances worsening to the greatest extent since July 2014 with the sole exception of the decline seen in May of last year.

Views on future finances also took a renewed downward lurch, resuming a worsening trend that has been evident over the past year.

The increased pessimism about finances has coincided with higher inflation. Consumer prices rose 2.7% on a year ago in April, the steepest rate of increase for three-and-a-half years. The HFI survey has since shown current inflation perceptions and expectations about future inflation remaining elevated in May, albeit easing slightly compared to April.

The squeeze on household budgets has been alleviated somewhat by rising income from employment, which showed one of the largest gains in the survey history in May, in part reflecting increased workplace activity (suggesting more hours worked).

Rising inflation has contributed to increased pessimism about future finances

However, a further marked drop in the amount of cash that households have available to spend suggests that growth of retail sales and other measures of consumption will continue to be limited in coming months.

Solid, but slower, growth of workplace activity was again reported in May

Income from employment showed one of the largest rises in the survey history

A drop in cash available to spend is likely to limit retail sales growth

Disclaimer: The intellectual property rights to these data provided herein are owned by or licensed to Markit Economics Limited. Any unauthorised use, including but not limited to copying, distributing, transmitting or otherwise of any data appearing is not permitted without Markit’s prior consent. Markit shall not have any liability, duty or obligation for or relating to the content or information (“data”) contained herein, any errors, inaccuracies, omissions or delays in the data, or for any actions taken in reliance thereon.

In no event shall Markit be liable for any special, incidental, or consequential damages, arising out of the use of the data. Purchasing Managers' Index™ and PMI™ are either registered trademarks of Markit Economics Limited or licensed to Markit Economics Limited. Markit is a registered trade mark of Markit Group Limited.

Original post

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.