Strain on household finances continues to ease

| November 19, 2012
Strain on household finances continues to ease

Financial information services company Markit has reported a further improvement in household finances.

Although household finances are continuing to deteriorate, the rate of deterioration fell in November, to its slowest rate for two years.

The Markit Household Finance Index increased from 39.0 to 39.3, its fifth increase in six months, but this is still well below 50.0, which indicates no change.

In November, 28 per cent of households said that their finances had deteriorated over the month, compared with 37 per cent in November 2011.

Seven per cent more households said that their finances had improved compared with the previous month.

Tim Moore, Senior Economist at Markit said: “November’s survey highlights that the alleviation of strains on household finances has continued as winter approaches.”

A fall in inflation in October is likely to have coloured households’ perception, although inflation increased again in November.

Markit reported an improvement in households’ financial outlook from 37.4 in October to 41.8 in November.

However, this still remains well below September’s score of 44.3.

With rents increasing rapidly due to high demand, the survey revealed a large drop in the finances of people renting from private landlords in November.

Meanwhile, a report for the Guardian suggests that households are cutting back on fresh fruit and vegetables and turning to high-fat processed foods which are perceived to be cheaper and more filling.

The Breadline Britain report found that 900,000 fewer people are managing to eat five daily portions of fruit and vegetables than they were two years ago.

Data compiled for the report by consumer analyst Kantar Worldpanel showed that consumption of fat, sugar and saturates has increased substantially since 2010, especially in the lowest income households.

The price of food has increased by 32 per cent over the past five years according to official figures, while households have faced wage freezes, high unemployment and benefit cuts.

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