Household budgets still tightly squeezed despite slight easing

Ben Southwood
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HOUSEHOLDS’ finances remained in a vice in January, despite a slight easing in budget pressures, according to data out this morning.

Markit’s household finance index climbed to 37.7 in January, up from December’s seven-month low of 36.8 – but the index still signalled rapidly deteriorating conditions, as it remained well below the 50 value that signifies no change.

Households also expressed less gloomy expectations for the coming year, with Markit’s index for the coming 12-months jumping from 40.3 in December to 42.8 this month. But this value also remained significantly under 50 and therefore suggested households had deeply downbeat expectations for their finances.

Adding to this dreary picture were statistics from the Incomes Data Services (IDS) that suggested managers’ and professionals’ pay would continue to be kept under retail price inflation.

The two groups of earners will add just 2.2 per cent to their nominal wages this year, IDS said in a separate report, also out this morning, below inflation forecasts.