Europe

Decline In British Household Finance Index Eases To 14-Month Low

U.K.'s household finance index deteriorated at the slowest pace in fourteen months in January, helped mainly by weakening inflationary pressures, data from a survey by Markit Economics showed Monday.

The household finance index came in at 38.7 in January, higher than the previous month's reading of 36.4. An index reading below 50 indicates contraction, while one above suggests growth.

At the same time, households expectations of their finances in the year ahead improved slightly, with the relevant indicator for the month of February rising to 42.5 from 42.0 in January. Data showed a marked jump in sentiment among people with a mortgage, with the index perhaps reflecting greater confidence that interest rates will stay at record low levels.

The indicator of consumers' expectations of inflation for the year ahead eased for the third straight month in February, and the reading was the lowest since October 2010.

"February's survey adds to the tentative signs that falling inflation has alleviated some of the squeeze on household finances and lifted expectations from the record lows of late last year," Tim Moore, senior economist at Markit, said. "These positive developments meant that debt levels stabilized and households' appetite for major purchases moved back to levels not seen since the VAT rise in January 2011."

by RTT Staff Writer