Household finances continue to deteriorate
Lower earnings, increased levels of debt and inflation worries took their toll on household finances in April, with the Markit Household Finance Index falling for the second month in a row.
The Index fell at the steepest rate for three months to 37.0 in April from 37.8 in March, with a score under 50 indicating that household finances are worsening.
The survey is based on monthly responses from over 2,000 households and focuses on areas such as household income, spending, saving and debt.
The deterioration in confidence follows a rise in inflation from 3.4 per cent to 3.5 per cent in March, with food and clothing both becoming more expensive.
In April, 33 per cent of households said their finances were deteriorating while just 7 per cent reported an improvement, with the biggest fall in confidence seen in the South West and Wales.
Household finances were the most stable in Scotland and the South East.
The survey, which includes questions designed to identify future trends, suggests that households face further pressure on incomes in the year ahead.
Just 25 per cent of households said they expected their finances to improve in the coming months while 47 per cent said they expected them to worsen.
However there was greater optimism over jobs security following improvements in the manufacturing, IT and Telecoms sectors, although activity in the construction sector fell.
Tim Moore, Senior Economist at Markit, said: “Worsening household finances during April are especially disappointing as it follows some signs that the consumer gloom had started to lift in the first quarter of the year.”
A recent study by Aviva suggests that Britons are experiencing a gap of £411 a month in their take-home pay and what they need to live on comfortably.
Over the course of a year, the typical Briton would need an additional £7,236 gross pay, according to the Times of Our Lives report which was based on data collected in February.