UK households are experiencing a slight relief in financial pressures with increased disposable income.
- Asda reports a 4.5% rise in disposable incomes for July, the highest since September 2021.
- Household disposable income increased by £9.48 a week compared to the previous year.
- Inflation eased to 6.8% in July, contributing to improved spending power through lower energy costs.
- Despite improvements, disposable income remains significantly below pre-crisis levels, especially for 30-49 age group.
UK households have begun to feel a slight relief in financial pressures as disposable incomes increased by 4.5% in July, marking the strongest annual growth rate since September 2021. According to Asda’s latest Income Tracker, the amount households have available after taxes and essential bills rose by £9.48 a week compared to the previous year, bringing the average disposable income to £218 per week.
In June, the increase in disposable income was £5.74 per week, highlighting a steady month-on-month improvement. This rise in July is attributed largely to the easing of inflation, which fell to 6.8% from 7.9% the previous month, primarily due to decreased energy prices. Additionally, reduced costs of food and non-alcoholic beverages played a role in the slowdown, thereby boosting household spending power.
Despite these optimistic indicators, it is important to recognise that family disposable income remains significantly below the levels seen before the cost-of-living crisis. The average household’s disposable income is down by £25.99 per week compared to July 2021. Households particularly affected are those in the 30-49 age bracket, who face a 9.4% increase in spending on essentials like food, housing, and utilities compared to a year ago.
Households aged 30-49 find themselves spending £726 weekly on essentials in July, which is £135 more than the average for all households. In contrast, older households aged 65 and above have seen an increase in their disposable incomes by 7.8% compared to the same period last year.
As part of efforts to support consumers, Asda has reduced prices on more than 200 of its own-label products, including a variety of fresh produce, frozen meats, and cupboard staples. Additionally, the supermarket has extended its popular ‘kids eat for £1’ offer in cafés until the year’s end, having served over two million meals since its inception in June last year.
Overall, while UK households are experiencing some financial relief, disparities persist, particularly among different age groups.
