Weak pay growth and rising living costs exert greater pressure on UK household finances

April's survey data signals sharpest fall in cash available to spend since August 2014, however, consumer demand holds up, as spending rises at fastest rate since June 2016.

April findings from the Markit Household Finance Index show the squeeze on UK household finances worsened during April, as highlighted by a fall in the seasonally adjusted Household Finance Index (HFI) to 42.5, from 43.1 in March. This was one of the lowest readings seen since the summer of 2014.

A sharp and accelerated squeeze on financial wellbeing was largely driven by renewed pressures on cash available to spend, which dropped at the fastest pace since August 2014. This reflected a combination of strong rises in living costs and subdued pay growth so far in 2017.

Despite a greater squeeze on financial wellbeing, the latest survey suggested that consumer spending remained resilient. Households reported the fastest rise in spending since last June.

There were signs that increased household expenditure had been achieved through an erosion of savings and greater demand for unsecured credit, with the former declining at the sharpest pace since July 2014.

Tim Moore, senior economist at IHS Markit, which compiles the survey, said: "April’s survey data reveals that pressures on UK household finances have returned to levels last seen in the summer of 2014, as rising inflation and subdued pay growth have created a renewed squeeze on cash available to spend. Households are also more worried about their financial outlook than at almost any other time in past three years.

"However, there was little sign that UK households have begun to rein in day-to-day spending. Instead, survey respondents reported the largest drop in savings for just under three years, while demand for unsecured credit continued to increase during April.

"Evidence that consumers are opting to maintain spending rather than belt-tighten provides a positive signal for UK economic growth in the short-term. The latest survey also highlighted a robust increase in workplace activity in April, which was broadly spread among private sector employees. This is an early signal that the wider UK economy has carried through a healthy degree of growth momentum into the second quarter of 2017."

Have you registered with us yet?

Register now to enjoy more articles and free email bulletins

Sign up now
Already registered?
Sign in

Before commenting please read our rules for commenting on articles.

If you see a comment you find offensive, you can flag it as inappropriate. In the top right-hand corner of an individual comment, you will see 'flag as inappropriate'. Clicking this prompts us to review the comment. For further information see our rules for commenting on articles.

comments powered by Disqus

Read These Next

Garden industry pursuing online sales growth

Garden industry pursuing online sales growth

How much will online plants sales be worth after Dobbies links with Ocado and other players enter the market?

Catering sales: debate on ideal ratio for garden centres

Catering sales: debate on ideal ratio for garden centres

Do garden centres want to make a greater proportion of sales through catering or do they want to make sure ratios against horticulture and other sectors stay the same?

What is the next step for garden centre catering?

What is the next step for garden centre catering?

It is no longer enough for garden centres to simply offer a catering service - the standards of catering are at an all-time high and now retailers need to have a wow-factor to stand out.

Follow us on:
  • Facebook
  • LinkedIn
  • Twitter
  • Google +
Horticulture Jobs

Horticulture Week Top 100 GARDEN CENTRES

Our exclusive ranking of garden centre performance by annual turnover. 

Garden Centre Prices

Neville Stein

Business advice from Neville Stein, MD of business consultancy Ovation

Read latest articles