LONDON- A gauge of British household finances hit a one-year high in January, adding to signs that consumer sentiment has improved in the aftermath of Prime Minister Boris Johnson’s decisive election win last month.
The monthly IHS Markit Household Finance Index rose to 44.6 in January from 43.2 in December, chiming with other sentiment surveys from both businesses and consumers that show an increase in optimism.
Earlier on Monday, property website Rightmove said asking prices for houses increased in January at a record pace for the month.
Still, Bank of England officials are waiting on hard data that will show whether the cheerier mood has translated into actual spending as they weigh up whether to cut interest rates later this month.
Retail sales data last Friday showed an unexpected drop in December and investors will be eyeing Tuesday’s official labour market data for November carefully.
“Latest survey data certainly show some post-election bounce for UK households, with the headline index up to a one-year high and house price expectations at their strongest since October 2018,” Joe Hayes, an economist at IHS Markit, said.
Weakening inflation had helped to ease pressure on living costs, the survey showed.
However, a separate index measuring households’ expectations of future financial wellbeing slid back into negative territory in January, as gauges of perceptions of workplace activity and income weakened.
The proportion of households expecting a Bank of England rate cut “at some time” increased to 23.1%, while those expecting a rate hike in the next three months went down slightly to 19.5%, IHS Markit said.
(Content and photos syndicated via Reuters)
