Asda’s latest Income Tracker reveals that disposable income for low-earning households in the UK hit a near three-year high in May, following a 12.6% increase year-on-year.
Despite this increase, budgets for these families remain under pressure in real terms, as their take-home pay was still not enough to cover bills and essential spending, leaving them with an average weekly shortfall of £66.
The Tracker also shows that disposable income for the average UK household reached its highest level since September 2021.
The average UK household was £31.33 per week better off in May compared to the same period a year earlier, following a 15.1% rise in disposable income to £239 per week. This marks the second consecutive month of double-digit annual growth.
A key driver behind the improvement in household spending power continues to be the deceleration in inflation, with key household categories, including food, drink and clothing, recording notable slowdowns. This is being complemented by strong income growth.
As a result, all UK households recorded record monthly improvement in annual growth in spending power. Disposable income for the highest-earning households has also now exceeded the pre-cost-of-living peaks.
Pushpin Singh, Senior Economist at Cebr, who produces the Income Tracker on behalf of Asda, said: “The Income Tracker continues to improve, with discretionary income increasing to £239 per week. This improvement continues to be driven by several factors, not least elevated nominal earnings growth, easing inflation, the uplift in the National Living Wage, and tax policy changes. Cebr anticipates spending power to see further improvements in 2024, bolstered by the relatively strong growth momentum seen in Q1 2024.”
