Around 20% of British households had ‘negative disposable income’ in June, with an average shortfall of £60 per week between what they earned and what they needed to spend on essentials such as groceries, electricity, gas, transport and mortgage or rent payments.
The data from the Asda Income Tracker also showed that soaring living costs, up 11% year-on-year in June, meant that families were on average £43.95 a week or £175.80 per month worse off compared to June 2021.
The average household had £200 per week left after paying tax and essential bills last month – a figure that has fallen for eight consecutive months to a figure last seen in December 2017.
In response to the crisis, many consumers are trading down in both stores and products, switching from mainstream supermarkets to discounters and from branded to lower priced own label products.
Asda recently launched a new ‘Essential Living Hub’, an online area where its customers can access a range of hints, tips and hacks to save money.
Separate research released last week showed more people are struggling to pay their energy bills, with half of UK households cutting back on how much food they buy as a result.
A survey from the Office for National Statistics (ONS) revealed that 46% of adults who pay energy bills are finding it very difficult to afford them. The research was carried out between July 6 and July 17 and shows an increase from 43% saying the same in the previous two-week period.
The ONS said one in five of those questioned reported borrowing more money or taking out more credit over the last month compared with the same period a year ago. The survey also found that 46% said they would not be able to save any money over the next year.
People are also putting less food on their tables because of the rising cost of living. Half of all adults said they are buying less in a food shop, with an equal proportion saying they are spending more than usual to do their normal shop.
NAM Implications:
- 20% of households with negative disposable income and not all inflation out of the supply chain yet!
- Key that suppliers and retailers take a realistic view and anticipate 15% inflation coming into winter.
- i.e. try some what-ifs on that basis…
- …and explore the impact on your offerings by category and channel.
