Rising prices have become the top financial concern for UK households, according to a monthly consumer confidence survey, before Wednesday\u2019s official figures, which are likely to show inflation remaining stubbornly high.<\/p>\n
Amid fears of higher interest rates owing to increased fuel prices after the closure of the strait of Hormuz amid the conflict in the Middle East, households have become \u201cincreasingly gloomy about their financial situation\u201d, the report said.<\/p>\n
The survey, from S&P Global, a data intelligence company, shows that its consumer sentiment index figure dropped to 42.1 in May, from 42.3 in April, the lowest level since July 2023 when inflation in the UK was soaring as a result of the Russian invasion of Ukraine. The index takes a combined figure tracking how people feel about their household spending, financial wellbeing, savings, debt and employment.<\/p>\n
Maryam Baluch, an economist at S&P Global Market Intelligence, said that aside from during the periods of the Covid pandemic and the Ukraine-related energy price rise, the index score has not been this low since 2012.<\/p>\n
The survey also showed Britons reporting a \u201csubstantial decline\u201d in their household savings in May, falling at the fastest pace since July 2023. It said this was being driven by high energy prices <\/a>and related costs \u201cwhich have significantly strained household budgets\u201d.<\/p>\n Baluch said: \u201cInflation worries have firmly taken centre stage. The rising cost of living is eating into savings at a rate not seen since 2011 if the pandemic is excluded, and is causing concern over future finances, in part due to growing conviction that interest rates are soon going to start rising.\u201d<\/p>\n The survey of 1,500 people showed 51% anticipate a rise in interest rates, the highest proportion in two and a half years. Rate-setters at the Bank of England<\/a> have suggested they will probably need to raise the cost of borrowing at some point this year if global oil prices remain high and push up inflation. The Bank has warned that typical energy bills are likely to rise 16% to \u00a31,900 by the summer and food prices will rise 7% by the end of the year.<\/p>\n