Latest figures from Asda’s Income Tracker reveal that for the first time in two years, all UK regions recorded positive annual growth in disposable income in the final quarter of 2023.
After paying bills and essentials, the average family had a disposable income of £224 per week in the fourth quarter. This was the highest amount since the start of 2022 and was driven by strong wage growth and inflation continuing to ease.
Despite the positive improvements, disposable income remains firmly down on the values witnessed prior to the cost-of-living crisis. Compared to the peak of £246 in the first quarter of 2021, UK-wide discretionary income has fallen by 9.1%.
London continues to have the strongest disposable income, with the average household in the capital seeing an increase of 10.1% to £301 per week across the last period. This means that their disposable income is now near the peak seen in 2021.
The East of England and Scotland also both recorded above UK-wide average disposable income values at £236 and £228 per week respectively.
Wales recorded the weakest increase in disposable income in the quarter, which was mainly driven by weak earnings growth in the region. Meanwhile, the North East witnessed the strongest growth at 11.3%, but it still has the second lowest income value at £146 per week.
In contrast, Northern Ireland’s spending power significantly lagged behind the UK average at just £103 per week. This can be attributed to weaker earnings growth and the country’s greater exposure to inflationary pressures. Consequently, disposable income in Northern Ireland remains firmly below its peak before the cost-of-living crisis. This difference is the highest amongst all regions of the UK.
NAM Implications:
- Encouraging rise in disposable income.
- But the issue for suppliers and retailers is how this will impact consumer expenditure.
- For instance, hitherto cash-strapped consumers have become accustomed to cutting back…
- …and have been saving/paying down debt with any ‘surplus’.
- Also, many have experienced the benefits / good quality of own-label…
- …and maybe beginning to query the size of the brand premium.
