Rising inflation has dampened UK households’ outlook for the next 12 months, according to a new survey from IHS Markit.
The firm‘s index measuring sentiment of UK households’ personal finances dropped from 47.1 to 45.8 between May and June.
This marks one of the lowest readings since 2013 and is the lowest in three months.
A further 58 per cent expected interest rates to rise over the next year, more than double the figure following the Brexit referendum.
Despite the Bank of England keeping interest rates at the record low of 0.25 last week as the pound dropped further since the General Election, three of the eight members of the Monetary Policy Committee voted for an increase. This has led to widespread speculation of an imminent rates hike.
“June‘s survey reveals that UK household finances remain under intense pressure from rising living costs,” IHS Markit senior economist Tim Moore said.
“While the squeeze moderated slightly since last month, worries about the outlook have deepened.”
With a dwindling wage growth and continual decent of the pounds value following the general election, inflation hit 2.9 per cent in May, its highest level in nearly four years.