Households slightly less gloomy on finances in January -survey

LONDON Mon Jan 21, 2013 6:05am GMT

Gas flames are seen burning on a cooker in London February 21, 2008, in this posed picture. REUTERS/Stephen Hird

Gas flames are seen burning on a cooker in London February 21, 2008, in this posed picture.

Credit: Reuters/Stephen Hird

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LONDON (Reuters) - Britons were slightly more optimistic about their financial prospects in January although household finances in general continued to deteriorate, a survey showed on Monday.

The Markit Household Finance Index rose to 37.7, after taking a sharp drop to 36.8 a month earlier which was its worst reading since May. But it remained far below the 50 mark that shows they see their overall situation as improving rather than worsening.

Expectations for future inflation fell for a third month - a relatively optimistic sign from consumers who have been hammered by the continuing robust growth in the cost of goods and services.

"January's survey provides a rare spot of good news on the consumer front, with households' financial sentiment rebounding appreciably after a dismal end to 2012," Markit economist Tim Moore said.

"Inflation perceptions are the lowest since last summer, while the index measuring households' appetite for major purchases picked up sharply from the near-record drop seen in December."

Still, just under a third of households saw their financial situation as deteriorating compared to only 6 percent who saw an improvement.

The survey of 1,500 adults was conducted online from January 9 to January 14. The Bank of England watches the survey to assess the underlying mood of British consumers in its policy deliberations.

There have been positive signs that the central bank's Funding for Lending Scheme is beginning to get more credit through into the broader economy, and Markit noted that the improved appetite for major purchases was thanks to a perception of easier access to loans.

Household debt rose in January, although Markit said the rate of increase was marginal and broadly in line with average for 2012 as a whole.

(Reporting by Patrick Graham; Editing by Hugh Lawson)

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