Soaring cost of living hits households

 
Julian Harris
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HOUSEHOLD finances have taken a massive hit this month, according to a Markit index which saw inflation surge to an all time survey high.

The cost of living measure showed 85 per cent of households reporting a rise in prices, Markit revealed today.

Mortgage holders were particularly downbeat, as price pressures increase the chance of a hike in interest rates.

Overall, 34 per cent of surveyed households noted a worsening of their finances in February, with only five per cent reporting an improvement.

“An unhealthy combination of high inflation and job worries has caused households to report that their financial outlook has slumped back to the levels seen during the worst part of the recession in early 2009,” said Tim Moore, senior economist at Markit.

Rising prices have largely hit those on low incomes, he said.

The household finance index slipped to 35.6, down half a per cent from January’s rate, and well below its long term average of 38.5.

However, the score was largely driven down by government sector employees. Respondents in the private sector actually recorded an improvement in their finances, with an index score of 37.8, slightly up from January’s 37.6.

And public sector workers remained especially pessimistic, with over half (58 per cent) reporting a negative 12-month outlook for their finances and only 13 per cent expecting an improvement.

Meanwhile, young people (aged 18 to 24) reported a record fall in their job security. Overall, around a quarter of respondents signalled a decline in their job security, with only seven per cent reporting an improvement.