It seems for the first time in two years there is a glimmer of optimism in the air amongst households. The idea of lower inflation improved the outlook of most households in June as it looks like the gap between wages and rising prices is finally starting to close. The spending power of households continued to fall in June as 33% of households said their finances were worsening and only 7% said they improved.

The prospect of unemployment has also been burdening many and has been the cause for a downbeat view of job security. The majority of households reported deterioration in their job security than an improvement, although the gap has closed to produce an index figure of 44.5 and the second highest reading since April 2010. These figures seem to support the government’s announcement that even though economy is still quite weak it has stopped getting worse.

Despite this the falling inflation figures have been considered by some as a pointer to the economy’s increasing vulnerability. Figures showing activity in the manufacturing, services and construction sectors have shown the UK’s worsening situation in recent months.

Furthermore the prospect of rising debt levels is increasing concerns that the economy is going to be suffering for the rest of the year. 

The CBI’s industrial trends survey offers some hope as it's reports said they expected to see rising orders and output this year. Tim Moore an economist at Markit said, “a worsening global economic backdrop in June, alongside reports of a greater drop in income from employment, continued to keep the pressure on household finances. This in turn resulted in an aversion to major purchases, as well as a further erosion of savings and subdued spending patterns, especially among the lowest income groups."