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Higher living costs continue to squeeze household finances in June


Key points for June 2017:

on financial wellbeing in comparison to the trends seen during 2015 and 2016. That said, the latest deterioration was the least marked in 2017 so far.

June data indicated that higher living costs remain a key factor placing pressure on household finances. The balance of respondents reporting increased prices for goods and services was less marked than the peak seen in February, but still among the highest recorded since early-2014.

Income from employment increased for the fifth month running in June, although this did not prevent a further sharp reduction in cash available to spend. Survey respondents also reported greater aversion to major purchases, as well as a sustained decline in household savings.

Expectations for finances in the next 12 months

UK households are downbeat about their financial prospects over the next 12 months, which continues the trend seen since April 2016.

Adjusted for seasonal influences, the index measuring expectations for finances in 12 months’ time dropped from 47.1 in May to 45.8 in June, to signal the greatest degree of pessimism for three months. The latest reading was also one of the lowest seen since the end of 2013.

Worries about the financial outlook were driven by people working in the public sector, with sentiment falling to its weakest since July 2014.

Workplace activity, job security and incomes

June data suggested the UK economic backdrop continued to soften. This was highlighted by the seasonally adjusted index measuring workplace activity easing to 52.9, down from 53.5 in May and the lowest since July 2016.

People employed in the retail sector reported an outright decline in workplace activity (index at 49.5). Finance/Business services staff reported only a

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Sharp deterioration in household finances in June, continuing the trend seen so far in 2017

Households indicate a further steep rise in their living costs

Growth of workplace activity moderates to 11- month low in June

Around 34% of UK households expect a Bank of England rate rise by the end of 2017

Data collected June 7-12th 2017.

This release contains the June findings from the IHS Markit Household Finance IndexTM (HFITM), which is intended to anticipate changing consumer behaviour accurately. The HFI is compiled each month by IHS Markit, using data collected by Ipsos MORI.

Current finances

Source: IHS Markit

At 43.8 in June, up from 42.6 in May, the seasonally adjusted Household Finance Index (HFI) remained well below the 50.0 no-change threshold. The latest reading signalled a sharp squeeze on household finances. Survey data for 2017 so far have pointed to an intensified squeeze

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