IHS Markit’s UK Household Finance Index (HFI) hit 47.6 in February, from 44.6 in January, as UK households’ perceptions of their financial wellbeing rose to its highest-ever levels.
The Household Finance Index rises to 47.6, from 44.6 in January as UK households foresee a solid improvement in their financial health over the next 12 months.
The survey says looking ahead, UK households signalled positive expectations towards their financial health. The Future Household Finance Index – which measures expected change in financial health over the next 12 months – rose to 52.7 in February, from 49.6 in January. The level of optimism was at its highest since the data were first collected in February 2009, exceeding the previous peak seen in January 2015.
Inflation expectations continue to retreat the proportion of UK households expecting a Bank of England rate cut rises to 27%.
Joe Hayes, Economist at IHS Markit, which compiles the survey, said “Survey data are leading the way for information on the post-election and post-Brexit period in the UK, and our latest Household Finance report signals a number of developments that should keep the Bank of England doves at bay and build optimism towards the UK’s immediate economic prospects.”
“Living cost perceptions suggests that a further slowing of inflation in the UK is on the horizon. Household inflation expectations were also trimmed, which bodes well for near-term consumer spending prospects given that nominal wages are still robust. A key driving force in 2019, a continuation of this trend will be crucial in 2020 as well.”
“Housing market data were also upbeat, with current prices perceived to have risen strongly in February and expectations signalling further growth over the coming year. Less concern towards job security, which was heightened by various uncertainties last year, could also help stimulate demand. “Post-election survey data so far scores a fairly good chance a first-quarter GDP pickup following a flat end to 2019.”