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UK household finances weaken at fastest pace in nearly 2 years: Markit
[LONDON] British households' financial situation weakened at the fastest rate in nearly two years this month, a survey showed on Wednesday, due more to slow wage growth and expectations of inflation than fears of next month's European Union referendum.
Financial data company Markit said its Household Finance Index for May fell to a 22-month low of 42.3 from 45.1 in April, though it was above the average reading of 39.9 recorded since the survey started in early 2009.
"In a period of heightened uncertainty ahead of the EU referendum, Markit's HFI survey pointed to a marked financial squeeze in May, but households' expectations for the year ahead were little-changed since April," Markit economist Philip Leake said.
The measure of current inflation perceptions touched a 17-month high. Markit's survey was conducted before the release of official data that showed inflation receded last month after hitting its highest level since December 2014 in March.
Households reported only a marginal rate of pay growth, and Markit said there was little expectation that the Bank of England would raise interest rates from their record low 0.5 per cent soon.
The proportion of households forecasting a rate hike in the next six months dropped to 22 per cent, well below the survey average and down from 25 per cent in April.
"With near-term economic prospects far from certain, the majority of households do not envisage monetary policy tightening any time soon," Mr Leake said.
The BoE has said economic indicators are likely to be hard to interpret in the run-up to the June 23 referendum on Britain's European Union membership, which opinion polls show are too close to call.