ONE IN three households reported worsening finances in June, but there was some relief from inflation’s upward march and a slightly sunnier economic outlook for the next year.
Just seven per cent of households reported improving finances in the last month, according to figures out today from Markit. The data provider’s current finances index gained 0.4 points to 37 in the month – pointing to a slower deterioration in household finances after a four-month low in May.
The index is firmly below the 50 no change mark, where it has remained since the research began in February 2009, and is lower than the average of 37.5.
Despite the gloomy picture, households have become slightly more optimistic about how they will fare in 12 months’ time.
Markit’s expectation score was the least gloomy in over two years, rising 2.7 points to 42.8 in June.
The drop in inflation last month has already been felt by households, with today’s figures showing inflation perceptions dropping for the third consecutive month. But for one in six households, this relief was outweighed by a fall in income from employment.
“Lower inflation provided some relief to UK household finances in June, ushering in a slower drop in cash availability and the least downbeat assessment of future finances for over two years,” said Tim Moore, senior economist at Markit.
“However, the overall picture is by no means akin to ‘fog in Channel; continental woes cut off’, and it will take much more than a dip in inflation to carry this resilience through the second half of 2012.”