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The UK households are still pessimistic about their financial situation. But they are less pessimistic than they have been in the last 2.5 years according to Markit UK Household Finance Index (HFI). This is a positive development, given the UK’s dreadfully slow economic recovery.
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| Source: MarkIt |
But there is one negative development coming out of this survey however. It seems that in September the UK households became concerned about inflation.
MarkIt: – The main negative development in September was a sharp increase in inflation perceptions, with the month-on-month acceleration the greatest since January 2011 (which followed a VAT rise). There was also a jump in inflation expectations, which reached their highest for four months.
Inflation expectations? That’s just silly. The BoE, the ECB, the BoJ, and now the Fed, all expanding their balance sheets in an unrestrained fashion shouldn’t make the UK households concerned. And those pesky high food prices are only temporary. The central banks will rein in inflation just as soon as it becomes a problem. Keep calm and carry on …
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