UK Dec Household Finance Index hits 19-month high, outlook remains subdued amid rising inflation expectations

Markit's Household Finance Index for December rose to a 19-month high on greater workplace activity and lower job insecurity. Household Finance Index (HFI) reading for December stood at 45.3, up from 43.8 in the previous month.

Financial pressures at UK households eased in December, with the index pointed to the weakest financial strain in over a year-and-a-half. Rise in workplace activity and fewer job insecurities combined to help ease the perceived strain on current finances. Workplace activity increased solidly for the fifth consecutive month during December.

That said, the seasonally adjusted index measuring expectations for finances in 12 months’ time pointed to one of the worst outlooks over the past three years during December. Current inflation perceptions picked up for the third straight month in December, with the respective seasonally adjusted index at a 32-month high of 76.0.

“Fears about greater inflation ahead are also underpinning pessimism towards the coming year. Stronger inflation, along with stagnant pay and an uncertain Brexit agenda, looks to be behind households’ worries about the future." said Philip Leake, economist at IHS Markit.

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