Figures from Asda’s latest Income Tracker suggest cost-of-living pressures are continuing to ease for many consumers.
The average UK household saw their disposable income rise by 6.1% year-on-year to £230 per week in January, marking the strongest figures since March 2022 and the tenth consecutive month of annual growth.
Despite elevated living costs and tighter policy conditions leading to a technical recession in the second half of last year, Asda noted that households are now beginning to see some improvements, with the early outlook for 2024 showing signs of recovery.
Factors such as weaker food price inflation, earnings growth, and the recent change to National Insurance contribution rates have improved the take-home pay for most working households.
However, it is not an equal picture of improvement across UK households. Middle-income households are witnessing the most robust growth as a result of these improvements. Their income grew by 15.6% when compared to the same period a year earlier, to £254 a week.
In contrast, the lowest-earning households are still the only group witnessing a fall to negative discretionary income. Their income decreased by 0.5% year-on-year, with a £69 weekly shortfall. This means that their take-home pay is not enough to cover spending on bills and essentials.
Sam Miley, Managing Economist and Forecasting Lead at Cebr, who produces the Income Tracker on behalf of Asda, commented: “Cebr expects spending power to continue growing in 2024, supported by a generally more positive economic outlook.”
Data released today by GfK shows that consumer confidence fell slightly in February amid concerns about the economy after the UK entered recession. However, the outlook remains more positive as consumers look to better times ahead with regards to their personal finances.
NAM Implications:
- Despite the implied optimism, the standout conclusion has to be:
- The lowest-earning households are still the only group witnessing a fall to negative discretionary income.
- Their income decreased by 0.5% year-on-year, with a £69 weekly shortfall.
- This means that their take-home pay is not enough to cover spending on bills and essentials.
