Asda’s latest Income Tracker shows that 60% of households in the UK saw a drop in weekly disposable income in August, as the rising cost of essentials such as food and transport continues to outpace wage growth.
The data confirms that the gap between income and everyday costs is widening, especially for lower-income households, who face a shortfall of £74 per week between their earnings and the amount needed to cover everyday essentials.
Recent figures from the Office for National Statistics (ONS) show overall inflation remained stubbornly high last month at 3.8%. Food and non-alcoholic drink prices increased for the fifth straight month, with an inflation rate of 5.1% – the highest level since January 2024.
The Asda data shows that lower-income households saw their disposable income fall by 3.2%, 31.8%, and 3.2% respectively, across the bottom 60% of earners. Middle-income households, typically more stable, experienced a second consecutive month of income decline, with further declines expected if inflation persists.
In contrast, high-earning households are bucking the trend with wage growth outpacing inflation, shielding them from the cost-of-living pressures.
Cebr, which produces the Income Tracker on behalf of Asda, has warned that if the current trajectory persists, the UK risks evolving into a ‘dual-speed’ economy, whereby earnings growth remains strong for the highest earners, while the lowest earners see their incomes flatline.
Sam Miley, Head of Forecasting and Thought Leadership at Cebr, commented: “The Income Tracker showed its weakest annual growth in over two years in August, as inflation remained sticky at nearly twice the Bank of England’s target. The fact that inflation is concentrated in essential spending categories is bad news for consumers, who are seeing more of their post-tax income covering food and household bills.
“Looking ahead, there is a risk that the Income Tracker starts to decline as we head into the crucial fourth quarter, presenting a risk to business health too.”
