Homes ‘optimistic’ on family budget

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Published: Wednesday 17th December 2014 by The News Editor

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Households feel more optimistic about family budgets than at any time over the last six years, a report says.

The seasonally adjusted Markit Household Finance Index measure of financial well-being for the next 12 months climbed to a record 51.6 in December, from 50.3 last month, as inflation fell and concerns about job security eased.

A reading over 50 separates pessimism from optimism.

By region, the brightest assessment of household finances came in the East Midlands, while pessimism was most pronounced in the North East.

Optimism was evident among construction workers for the first time since August, but retail workers were the most downbeat for the third consecutive month.

The report found that household concerns over inflation were muted at 69.3, from 73 two months ago, as official data today showed that quarterly average earnings excluding bonuses grew by 1.6%.

Official figures today also found that the unemployment rate fell by 63,000 to 1.96 million for the three months to October.

This comes after Office for National Statistics data said yesterday that inflation fell to a 12-year low of 1% after the collapse in the price of oil drove down petrol prices and other costs.

The Bank of England said it expects inflation to fall below 1% in December and stay below that level for several months next year.

Low inflation gives the Bank leeway to leave historically low interest rates on hold at 0.5%, keeping the pressure off borrowers.

The Markit survey said that around 31% of households expect interest rates to remain on hold until at least the end of next year.

Markit economist Philip Leake said: “The 12-month outlook for financial wellbeing was the most optimistic in the survey’s six-year history in December.”

“Positive sentiment was supported by reduced pressure on savings, further growth of workplace activity and falling inflation expectations.”

This month’s unadjusted Markit Household Finance Index measure of financial well-being for the next year is 42.7, little changed from 42.8 in November, and still the third highest reading in the survey’s 71-month history.

Published: Wednesday 17th December 2014 by The News Editor

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