Living costs have increased at the slowest rate in three years this month, but UK households remain concerned about their cashflow, job security and the housing market.
The January Household Finance Index (HFI) Index, compiled by Markit Economics and providing the earliest indication of actual changes in UK household finances each month, shows that, despite a rise to a three-month high of 44.8 in January, it still remained below the no-change mark of 50.0, thereby indicating that UK households expect finances to deteriorate over 2019.
According to survey respondents, workplace activity among high earners grew solidly during January and at a slightly accelerated pace, and those in higher income brackets also saw earnings from employment grow.
Having hit the lowest level of confidence in six years (excluding the month after the EU referendum) during December, confidence in the property market remains low, with households in London, Scotland and the North East expecting house prices to decline over 2019.
Joe Hayes, Economist at IHS Markit, comments: “There was no financial respite at the beginning of 2019 for UK households, with survey data showing current finances once again deteriorating. Expectations remain anchored upon this downbeat trend continuing throughout the year ahead. A number of other survey indicators reinforce the negative stance by households, as job security perceptions deteriorated to a near one-year low, while there was no bounce back from the stark drop in house price expectations seen in December.
“Political deadlock over Brexit merely adds extra uncertainty to an already unfavourable financial environment for UK households. However, improvements may come to the fore in coming months if uncertainty about the path of Brexit becomes more clear. Furthermore, survey data show that living costs have risen at the slowest rate since the start of 2016, helping to alleviate cost burdens and free-up disposable incomes.”
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