Appetite for big ticket items falls to 18-month low
UK households’ appetite for big ticket items – like cars and holidays – has fallen at the fastest pace recorded since September 2017, the IHS Markit Household Finance Index (HFI) has indicated.
The data, which was collected between 7 and 12 March 2019 using survey data collected by Ipsos Mori, suggests that Brexit uncertainty is weighing on consumer appetite.
This may help to explain why the HFI indicated the largest squeeze on financial wellbeing in the UK for 13 months, reflecting a sharp rise in living costs and a steep drop in cash available to spend. The index has been on a downward trend since August of last year.
“A sharp drop in UK households’ appetite for major purchases was the main signal that Brexit uncertainty had some impact on consumer spending,” explained Tim Moore, associate director at HIS Markit.
“This index was close to a five-year low, which may reflect a wait-and-see approach to holiday bookings and other big-ticket spending commitments during the latest survey period,” he added.
Nevertheless, it wasn’t all bad news. March data indicated that concerns about job security were the least widespread for three months, while survey respondents pointed to a marginal increase in earnings. This is supported by a more subdued rate of living cost inflation in comparison to 2018.
Looking ahead, respondents were divided on the next move from the Bank of England regarding interest rates. Around 27% of UK households expect to see an interest rate hike over the next three months – the highest level recorded since July of last year. However, 14% expect to see a cut.
In addition, more than two thirds expect the Bank of England will raise interest rates over the next 12 months.