Now Markit’s household finance index comes in at a two-year low as families batten down the hatches
Families are feeling a pinch in their pockets as the latest crucial indicator of consumer confidence falls to a two-year low.
The Markit household finances index, which tracks disposable incomes and optimism among UK households crashed to 42.3 – on an index where scores below 50 indicate pessimism – from a score of 45.1 last month.
"The reading pointed to a substantial deterioration in financial wellbeing," Markit confirmed.
Read more: Employment just reached a new record high, but still the economists aren't happy
A combination of the highest inflation expectations since December 2014, the sharpest fall in savings since September 2014 and drops in disposable incomes for people working in every sector of the economy and living in every region of the country, pushed the headline rate down to its lowest score in 22 months.
London suffered the second-steepest fall in finances behind Wales, while public sector workers were also feeling a little more downbeat that those in the private sector.
"In a period of heightened uncertainty ahead of the EU referendum, [the survey] pointed to a marked financial squeeze in May," said Philip Leake, an economist at Markit.
Read more: Bank of mum and dad faces a funding crisis
With the economic outlook starting to wane, the proportion of respondents expecting the Bank of England to raise rates also dropped, but remain far apart from market expectations.
One in four members of the public expect interest rates to go up in the next six months, with 46 per cent expecting a rate hike by the end of the year. By contrast, financial markets are not fully pricing in an interest rate rise until mid-2019.
Only eight per cent of respondents said interest rates could go down before they go up, whereas overnight futures prices suggest the market puts the chances at somewhere between 35 and 40 per cent.