Recent data indicates that UK households are experiencing a notable increase in disposable income.
- According to Asda’s Income Tracker, there was a 12% year-on-year rise in August.
- Average disposable income reached £247 per week, surpassing pre-crisis levels.
- Inflation on food and drink has slowed, contributing to this financial relief.
- Lower income households still face challenges despite overall improvements.
Recent reports underscore a significant boost in disposable income for UK households, aligning with a moderation in inflation rates. Asda’s latest Income Tracker reveals a 12% year-on-year increase in disposable income for August, marking the fifth consecutive month of double-digit growth.
The data shows that the average UK household now enjoys a disposable income of £247 weekly. This figure exceeds the pre-cost-of-living crisis peak of £246 seen in March 2021, underscoring a positive economic shift as inflationary pressures ease.
Although overall inflation remains unchanged since July, a noteworthy drop to 1.3% in food and drink inflation has occurred, providing additional financial breathing space for households. Asda anticipates further increases in spending power as inflation has reduced by 5% since last August, improving the financial outlook towards the festive season.
However, despite these gains, lower income households continue to struggle. Their rate of spending power growth lags behind others, leaving them with an average shortfall of £66 weekly. Experts warn that these households may endure cost-of-living pressures for a more extended period.
CEBR senior economist Pushpin Singh commented on recent economic trends, noting that although wage growth currently surpasses consumer price inflation, the momentum in spending power may slow as wage growth tapers, with inflation potentially remaining above the 2.0% target for an extended period.
This positive trend in disposable income growth provides hope, though challenges remain for the UK’s lower income households.
