High inflation and depressed wage rises might have squeezed household finances in the past year – but the overall outlook is more positive than it has been for nearly two years.
That was the big finding from global information services company Markit's latest Household Finance Index.
It found that, although a higher proportion of people still thought their financial position would worsen in 2012 than improve, the gap between the pessimists and the optimists was at its smallest since April 2010.
Forty-three per cent of households predicted a deterioration of their financial circumstances, while 28 per cent were hopeful of an upturn in their fortunes.
Markit senior economist Tim Moore said the finding "adds to the tentative signs that falling inflation has alleviated some of the squeeze on household finances."
While its measure of consumer confidence hit an all-time low late last year, Moore added that debt levels had since stabilised, "and households' appetite for major purchases moved back to levels not seen since the VAT rise in January 2011".
He did, however, sound a warning note saying that many people's uncertainty about their job prospects was holding them back from committing to splashing out on so-called 'big ticket' items.