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UK Household Finance Index At 6-month Low: IHS Markit

UK households' assessment of their future financial wellbeing fell to its lowest level in six months in December, amid a stronger increase in living costs and a weaker rise in employee earnings, survey data from the IHS Markit and Ipsos MORI showed on Monday.

The IHS Markit Household Finance Index, or HFI, fell to 43.9 from 44.4 in November, marking the lowest reading since June.

UK households expect financial well-being to deteriorate over the coming year, the survey said. Rising living costs and a weaker growth in income from employment made them reduce their savings at a faster pace.

Households' assessment regarding future finances was among the most downbeat since the start of 2014.

House price expectations lowest since July 2016 and households' confidence regarding growth in the value of their property over the coming year was the lowest in six year after excluding the month after the Brexit referendum.

London households were the most downbeat regarding future house prices and their confidence was the lowest since 2009.

The survey also found a notable increase in the proportion expecting the central bank to cut interest rates, up from 6.5 percent to 11.2 percent.

"HFI data demonstrate the negative impact that political and economic uncertainty is having on households," IHS Markit economist Joe Hayes said.

"If sentiment continues to decline, the effect on the real economy may become more apparent in hard data if households begin to alter consumption behavior."

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