HOUSEHOLD FINANCE ‘UNDER PRESSURE IN AUGUST’

Filed in Real Estate by on August 23, 2010

Household finance ‘under pressure in August’

Most households surveyed reported a range of pressures from rising prices to falling property values

Household finances came under pressure on all fronts in August, according to market researchers Markit and YouGov.

Their survey of 2,000 households showed people were increasingly worried about losing their jobs and higher costs of living.

The Household Finance Index suggests individuals are feeling few benefits from the growing economy.

Some 30% of polled households said their finances had worsened, compared to 6% who said they had improved.

Nearly 69% of respondents reported a rise in the price of their goods and services in August from July, the highest level since the survey began 18 months ago.

Tim Moore, economist at Markit, said: “Stronger growth in the UK economy has done little to put a floor under the downturn in household finances.”

BBC business correspondent Joe Lynam says the HFI is intended to accurately anticipate changing consumer behaviour, and its latest findings seem to contradict the official data which shows the UK economy had grown quite well in the second quarter.
‘Downbeat mood’

UK inflation eased to 3.1% in July from 3.2% in June, and the Bank of England says it is not overly concerned about price rises, which it thinks are the result of temporary pressures.

But it seems individuals are not as confident – the survey found 86% of those polled expected a rise in their cost of living.

With government cutbacks and likely tax rises looming, nearly half of the respondents expected their finances to weaken further over the coming year – while only a quarter felt their incomes would improve.

Job security featured prominently in the results with 22% of private sector respondents reporting a drop in job security, compared to 6% who said they felt more secure.

A weak housing market completes the depressing picture, with about 23% believing their property had lost value in August, compared with 9% who thought it had increased.

Mr Moore said the findings represented “a downbeat mood” which spanned the household income spectrum.

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