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[LONDON] Optimism among British households about their financial prospects in the year ahead jumped to a new high this month as inflation tumbled and the prospect of higher interest rates looked more distant, a monthly survey showed on Wednesday.
The Markit household finance survey's measure of financial well-being for the next 12 months rose to its highest level since the survey started six years ago, beating the previous record set in December.
"With consumer price inflation hitting multi-year lows, households have pushed back expectations regarding the next rate rise from the Bank of England, with less than one-third of respondents anticipating an increase in the first half of 2015," said Philip Leake, an economist at survey compiler Markit.
Britain's most widely used inflation gauge, the consumer price index, slumped to 0.5 per cent in December from 1.0 per cent in November, its lowest level since 2000, and looks set to weaken further in the coming months.
Financial markets are mostly pricing in a first rate hike by the BoE in 2016.
Markit's headline Household Finance Index, which gauges households' current financial health overall, rose to 45.6 from 43.2 in December, also a record high but still below the 50 mark which separates pessimism from optimism.
While low inflation boosted confidence amongst households, there was less good news on wages, with the survey finding only a marginal increase in income from employment in January.
The survey was due to be published at the same time as official data which economists predicted would show earnings rising by significantly more than inflation in November.