The Squeeze gets tighter

British households are feeling the tightest squeeze on their finances in three years. British households have been pinched by fast-rising inflation since last year’s Brexit vote and weak rises in wages.

The monthly Household Finance Index fell to 42.8 in September from 43.4 in August though above a three-year low of 41.6 seen in July. Looking at the third quarter as a whole, the index’s average reading is its lowest since 2014. The amount of cash available to spend continued to fall at one of the steepest rates seen over the past three years.

Last week the BoE said it expected to raise interest rates in the coming months if inflation pressure continued to build.

“With the Bank of England sounding increasingly eager to start hiking interest rates, the prospect of higher borrowing costs and increased mortgage payments is likely to hit households further,” Tim Moore, a director at IHS Markit, said.