Financial pressure on UK households eases from 3-year peak

The financial pressure felt by UK households eased in August, down from a three-year peak last month on account of lower inflation and greater job security, a new survey has revealed.

Global research and analysis outfit IHS Markit said on Monday (21 August) that its monthly Household Finance Index improved to 43.5 from 41.6 seen in July; a level that marked a peak in household pressures since 2014.

Both readings are well clear of the survey's average reading of 40.4 noted during the global financial crisis in 2009, but below the 50-level that would suggest households felt richer.

IHS Markit economist Sam Teague said: "UK households continued to face a sharp budget squeeze in August, driven by sustained inflation and weak pay growth. On the bright side, receding concerns about job security were recorded too."

Furthermore, of all the households IHS Markit surveyed, only 33% said they expect UK interest rates to rise within the next 12 months, down from 48% in July, after the Bank of England issued a largely cautious tone on the direction of the economy, pouring cold water on an imminent interest rate hike.

Earlier this month, the Office for National Statistics said unemployment fell to a four-decade low of 4.4% in the three months to June, while inflation held steady at 2.6%, below a 4-year peak of 2.9% recorded in May.