Brits faced an even steeper uphill challenge to maintain their living standards in April as squeezed disposable incomes meant finances deteriorated at the fastest pace for three months, latest figures show.
Higher debt levels and a renewed upturn in inflation expectations were the main setbacks, which in turn brought the outlook for household finances to its lowest in 2012 so far, according to the Markit Household Finance Index.
The index dipped for the second month running in April and remained well below the neutral 50.0 mark at 37.0, down from 37.8 in March, signalling an accelerated worsening of household finances.
Almost five times as many households reported declining household finances (33 per cent) as those that saw an improvement (seven per cent), the survey indicates.
Households reported falling incomes and sharply increased living costs, which in turn caused a substantial drop in their appetite for major purchases.
Yet concerns over job security relaxed to its lowest level in more than two years, helped by improvements in the manufacturing and IT & telecoms sectors, Markit said.
But construction workers were the most downbeat about job security in April and, alongside retail staff, were the only job sectors to see a fall in workplace activity.
Inflation expectations increased, with most Brits expect a rise in living costs over the next 12 months, the index reveals.
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.”
This makes the Government’s quarterly GDP figures, due to be released on Wednesday, even more important for consumer confidence, he added.