Household disposable incomes fell in every UK region during the last quarter of 2022, confirming that no areas of the country are immune from the cost of living crisis.
This is according to latest figures from Asda’s Income Tracker, which shows the amount households had to spend on themselves, after paying taxes and essential bills, fell by 11.4% year-on-year to an average of £209 per week. The study noted that the decline in disposable incomes was the result of a sharp increase in household bills, particularly gas, electricity, fuel and food, compared to the previous year.
Households in the South East saw the biggest fall in disposable income – down by £44 per week (24% year-on-year) to £186 in the fourth quarter of 2022.
Northern Ireland saw the largest fall in percentage terms, with disposable incomes declining by 27.6% year-on-year to an average of £93 per week, a figure which represents a seven-year low.
In Wales, household disposable incomes were 15.9% down compared to a year earlier, averaging £170 per week – the lowest amount since 2017.
As part of its moves to support customers during the cost of living crisis, Asda recently launched a new initiative where customers can cook seven evening meals for a family of four for under £20 using ingredients from its Just Essentials value range.
Meanwhile, separate figures released today by Retail Economics show that the UK’s least affluent households have almost £40 a month less spare cash than they did a year ago, while the richest have gained a similar sum.
The wealthiest 20% of households had £36 a month more in discretionary income in December compared with a year ago as they enjoyed record earnings growth which offset rising energy and food bills.
The differing fortunes recorded on its cost of living tracker reflect a higher rate of inflation of 16.5% for those at the bottom end of the income scale, who spend two-thirds of their income on essentials such as food and energy, compared with 13.3% for those at the top, who spend just under half.
Richard Lim, Chief Executive of Retail Economics, said: “Freezing temperatures across the UK are focusing minds on the cost of energy and the squeeze on their budgets, with many adapting their shopping behaviour as a result. There continues to be an uneven impact across affluence groups and the wealthiest are actually seeing their discretionary spending power rise on the back of record earnings growth, while the least affluent see their spare cash eroded by inflation.
“This will play out differently across the market with many trading down, delaying expenditure where possible and cancelling some purchases altogether. Meanwhile, luxury spending is likely to remain more isolated from the impact leaving mid-tier retailers particularly exposed.”
NAM Implications:
- “many trading down, delaying expenditure where possible and cancelling some purchases altogether”
- i.e. anticipate any growth in these circumstances…
- ..coming at the expense of rivals with less of a competitive edge?
- Time to reassess how you compare with rivals?
