Daily Times

LONDON: British households are more downbeat about the outlook for their finances than at any time since late 2013 as rising inflation squeezes their disposable income, a survey showed on Wednesday.

Official figures on Tuesday showed inflation in February jumped to its highest level in over three years at 2.3 percent, as sterling’s fall since Britain voted to leave the European Union last year pushed up the cost of imports.

Financial data company Markit said on Wednesday its monthly Household Finance Index showed Britons’ expectations for their finances over the next 12 months dropped sharply to 45.3 from 48.1, its lowest level since November 2013.

“A combination of rising inflation and subdued pay trends has forced households to recalibrate their expectations for the year ahead,” said Tim Moore, an economist at IHS Markit.

Markit’s headline household finance index improved slightly from February but remained close to its weakest level in the past two years, rising to 43.2 from 42.5.

The survey – conducted between March 15 and 19 – showed 58 percent of households expect the Bank of England to raise interest rates from a record low 0.25 percent over the next 12 months, up slightly from February’s 56 percent but below the one-year high of 62 percent seen in January.

On March 16, minutes of the BoE’s latest policy meeting showed a split among Bank officials on rates with external policymaker Kristin Forbes calling for a 25 basis-point rate hike. The Markit survey was based on an online poll of 1,500 Britons aged 18-64, conducted by polling company Ipsos MORI.