Asda’s latest Income Tracker shows that the amount the average household had to spend on themselves after paying taxes and essential bills in November was up by £15.20 a week compared to the same period a year earlier. However, research suggests consumers will continue to look for ways to save money this year, including cutting back on non-essential spending, buying more own-label products, and seeking out discounts.
The latest increase in disposable increase marks the eighth consecutive month of improvement and the highest annual growth rate in over two years (since September 2021), with the average now £228.
Asda noted that the latest improvement shows that the financial burden facing many families continued to ease in the run-up to Christmas, which is attributed to sustained annual growth in gross income and a sharp slowdown in inflation.
Transport, including fuel, was the main driver of the latest month-on-month slowdown of inflation, whilst the food category also saw growth fall into single-digit territory for the first time since June 2022, at 9.2%.
Asda’s data confirms it was the highest-earning households that recorded the strongest annual gross income growth for a ninth consecutive month. Discretionary income for these households was £819 per week in November, a rise of 9.4% year-on-year, highlighting the impact of the easing of inflation and the strong wage growth environment.
Despite these improvements, the tracker indicates that lowest earning households are still bearing the brunt of the cost-of-living crisis with a deficit of £70 in disposable income per week – meaning their take-home pay is not enough to cover spending on bills and essentials.
Separate research released this week by KPMG shows that four in 10 consumers are heading into 2024 feeling less financially secure than when 2023 began.
Assessing confidence for 2024, the accountancy firm’s latest Consumer Pulse survey of 3,000 UK consumers found those feeling worse about their financial security outnumber those feeling more secure by almost two to one (41% vs 22%).
The findings also showed that two-thirds of consumers say they will have to cut their non-essential spending in 2024, with eating out (78%), takeaways (70%) and clothing (57%) the top three of a wide range of cost-cutting targets.
This is the same top three as when KPMG polled consumers on their 2023 spending intention 12 months ago. But the number of consumers saying they will target these categories for cutbacks in 2024 has risen sharply compared to a year ago, when eating out was selected by 46%, takeaways by 42%, and clothing by 42%.
Compared to a year ago, the 2024 survey also shows clear jumps in the number of people saying that they will buy more own brand and value produce next year (46% vs 31%), and more promotional and discount produce (46% vs 30%).
Intention to shop at lower cost stores more in the year ahead has also risen (40% vs 27%), as has using retailer loyalty schemes more to unlock lower prices – with 40% of consumers saying they will do more of this in 2024, compared to 18% saying so twelve months ago.
Linda Ellett, UK Head of Consumer, Retail and Leisure for KPMG, commented: “As was the case in 2023, large numbers of consumers tell us that they are going to combine stopping, reducing, and switching the things they buy to save money in 2024.
“As more households are exposed to higher mortgage rates or rent, the number of people needing to cut non-essential costs increases. Our survey also indicates that those consumers who have already adapted their shopping behaviour to lower their costs during 2023 are going to continue these steps during the next twelve months.
“Around half of consumers we surveyed said they will buy more value, own brand, promotional, or discount produce. Forty percent of consumers also intend to use retailer loyalty schemes more in 2024
“Price is way out ahead as the main purchasing driver and retailers are going to be expected to continue to incentivise to compete. With margins under prolonged pressure and interest rates remaining elevated, this consumer and economic landscape will continue to challenge the structure of some businesses.”
NAM Implications:
- Key stand-out: Price is way out ahead as the main purchasing driver.
- And having tried discounters and own-label alternatives…
- (And found them ‘better than expected’ in our opinion)
- …‘How can we get them back to the mults and brands, in pre-Lockdown numbers?’
