September data reveals sharp deterioration in UK household finances

The IHS Markit UK Household Finance Index (HFI) has found the average HFI reading in quarter three 2017 is the weakest for three years.

Rising living costs and subdued pay growth remain key pressures on household finances.

Cash available to spend has fallen sharply again and only 29% of UK households expect a Bank of England rate rise during the next six months.

September data confirmed that UK household finances deteriorated at the sharpest pace for three years in the third quarter of 2017. The seasonally adjusted IHS Markit Household Finance Index (HFI) registered 42.8 in September, down from 43.4 in August and well below the neutral 50.0 threshold.
The average index reading dropped to 42.6 in Q3, which was the lowest since the third quarter of 2014.
Intense pressures on household finances were recorded across all regions in September, driven principally by the on-going squeeze on real incomes from higher prices and low wage growth.
The amount of cash available to spend continued to fall at one of the steepest rates seen over the past
three years. However, spending rose again, and at an increased rate, fuelled by a combination of modest growth of income from employment and reduced savings.
Households meanwhile indicated a continued recovery in their house price expectations from the 10-month low seen in June.
Expectations for finances in the next 12 months September data also indicated that UK households expect a sustained deterioration in their financial wellbeing over the next 12 months. However, the seasonally adjusted index edged up to 47.8, from 47.3 in August, to signal the lowest degree of pessimism for seven months.
Meanwhile, GCA chief executive Iain Wylie said August was likely to see a small increase in sales compared to August 2016 at member garden cenrtes on average.

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