Living costs have risen at the slowest rate in three years this month, however UK households remained downbeat due to concerns over job security, lower cash availability and pessimism over the UK housing market.
The Household Finance Index, which measures household's perceptions of financial wellbeing, increased in January to a three-month high of 44.8 but remained below 50, indicating pessimism towards finances.
Workplace activity among high earners grew at a faster pace in January, and those in higher income brackets also saw earnings from employment grow, according to research by IHS Markit.
There was no improvement in property price expectations after confidence hit a six year low last month, and households in London, Scotland and the North East expect house prices to decline over 2019.
IHS Markit economist Joe Hayes said: “There was no financial respite at the beginning of 2019 for UK households, with survey data showing current finances once again deteriorating.
“Expectations remain anchored upon this downbeat trend continuing throughout the year ahead. A number of other survey indicators reinforce the negative stance by households, as job security perceptions deteriorated to a near one-year low, while there was no bounce back from the stark drop in house price expectations seen in December.
“Political deadlock over Brexit merely adds extra uncertainty to an already unfavourable financial environment for UK households.
“However, improvements may come to the fore in coming months if uncertainty about the path of Brexit becomes more clear.
“Furthermore, survey data shows that living costs have risen at the slowest rate since the start of 2016, helping to alleviate cost burdens and free-up disposable incomes.”