Lower inflation and more jobs ease pressure on UK incomes

INCOMES are less squeezed than at any time since the recession, as households feel inflation is falling and job security is firming up.

This month, Markit’s household finance index hit the highest level since it began in 2009. The survey takes into account conditions like job security, workplace activity and inflation perceptions.

Overall, the index reached 41.5, still far below the 50 level that would signal household finances are no longer deteriorating. The worst pressure on incomes came in 2011, when the score fell below 34.

The survey is likely to be good news for Prime Minister David Cameron, who said last week that take-home pay is now rising faster than prices, citing Treasury figures.

“January’s survey highlights some light at the end of the tunnel for UK households, with falling consumer price inflation and better labour market conditions helping to bring down the squeeze on finances after five years of gloom,” said senior economist Tim Moore at Markit.