Households in the UK suffered another record drop in discretionary incomes in May and were £41.94 per week worse off compared to the same time last year, according to latest figures from the Asda Income Tracker.
The Tracker showed that rising inflation pushed up household spending on ‘essentials’ such as fuel, groceries, energy bills, utilities, mortgages and rent, to £532 per week – a 10.6% increase year-on-year. As a result, after paying taxes and essential bills, the average household has £202 a week in discretionary income to spare.
However, the data confirms that the situation for low-income households is far more acute as their disposable income has fallen by more than 100% year-on-year, leaving them with a negative disposable income figure of £58 – meaning their post-tax income does not cover the costs of essential spending. This was blamed on the withdrawal of the Universal Credit uplift, as well as the concentration of inflation in essential spending categories.
The Centre for Economics and Business Research (CEBR) – which collates the report on behalf of Asda – has said it expects to see a month-on-month reduction in disposable income throughout 2022, hitting a further low in the Autumn when energy prices increase.
Asda stated that it is already seeing customers change their behaviour as inflation places extra pressure on household budgets – with 44% of those recently surveyed saying they are buying more on promotions.
When asked about their shopping habits, 41% revealed they were buying less in a bid to save money, whilst 39% said they were swapping branded items for own-label products where possible.
At the start of the month, Asda launched its new ‘Just Essentials’ value range in response to the cost-of-living crisis. This includes a much broader range of fresh food and vegetables. Around 100 products are currently available with the full range rolling out by the end of the summer.
NAM Implications:
- Regular NamNews readers will not be surprised…
- …and are prepared for the worst.
- Time to count every ‘penny’.
- i.e. Divide planned expenditure by your net margin and multiply by 100…
- …to calculate the incremental sales required to fund the purchase.
