LONDON, June 19 Households in Britain have
become more worried about the outlook for their finances in the
12 months ahead as rising inflation puts a squeeze on their
spending power, a survey showed on Monday.
IHS Markit said its index measuring how households feel
about their personal finances fell to 45.8 in June from 47.1 in
May, the most pessimistic in three months and one of the lowest
readings since the end of 2013.
The firm's overall Household Finance Index, measuring how
people feel about their current situation, rose to 43.8 from
42.6 but remained below the 50.0 no-change level.
Britain's main measure of inflation hit 2.9 percent in May,
its highest level in nearly four years after last year's Brexit
vote hammered the value of the pound, and growth in wages is
lagging behind, official data showed last week.
That is eating into the spending power of consumers who
typically drive British economic growth.
"June’s survey reveals that UK household finances remain
under intense pressure from rising living costs," said Tim
Moore, senior economist at IHS Markit.
"While the squeeze moderated slightly since last month,
worries about the outlook have deepened."
The survey also showed 58 percent of respondents expected
higher interest rates in 12 months time, more than double the
figure seen after the Bank of England cut interest rates last
August following the Brexit vote.
The BoE kept rates at their record low of 0.25 percent last
week but three members of its eight-strong Monetary Policy
Committee voted for a rate hike, surprising investors and
raising speculation that an increase in borrowing costs might
come sooner than previously expected.
(Reporting by William Schomberg; Editing by Jonathan Oatis)