Consumers reported this month that their money is more stretched than at any point since April 2014, the report from analysis form IHS Markit said.
However, there was a major gap between the confidence of those working in the public and private sector, with those employed by the state signalling the greatest degree of pessimism for just over two-and-a-half years, while private sector workers reported the most upbeat expectations for their household finances since March 2016.
Living costs rose last month at the fastest pace since April 2014, while with income from employment rising only marginally, households recorded the sharpest drop in their appetite for major purchases for just over three years.
Yet the latest survey indicated that worries about job security were the least widespread since the end of 2015.
Tim Moore, senior economist at IHS Markit, said: “UK household budgets are starting to feel the squeeze from rising consumer price inflation, with financial well-being worsening at one of the fastest rates since the summer of 2014.
"However, there was positive news from the survey’s measure of workplace activity, which signalled the strongest growth momentum since December 2015. Busier workplaces meant that worries about job security continued to recede from the lows seen after the EU referendum. Households are now among the least downbeat about their job security since the survey began in 2009, largely reflecting an improved trend among private sector employees."
He added: “Looking ahead, the outlook for financial well-being and consumer spending will depend on households’ ability to weather a sustained period of rising living costs. This can already be seen in the clear divergence between the financial expectations of private sector employees and other UK households.