Spending power of UK households is under pressure and 40% of households saw it declining further last month, according to the latest Asda Income Tracker.
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That came as inflation rose to 3.6%, the highest rate since January 2024, and while that’s still relatively low, the legacy of higher inflation in recent years is still having an impact making even small price rises hard to swallow.
The tracker said the impact continues to be felt most by the lowest-earning households. Their spending power growth dropped by 8.1% year-on-year, leaving them with a weekly shortfall of £74 between what they earn and what they need to cover essential bills and everyday costs.
The most significant drivers behind the rise in inflation were increases in everyday essential categories such as food, fuel, and utilities.
And their inability to cope with such price rises also means that their discretionary spending on items such as fashion and beauty is severely restricted.
We’re also told that the effects are being felt unevenly across the UK. Households in some regions such as the West Midlands saw their spending power growth shrink by 0.6%, compared to 12% growth in the same period last year. This left families in the region with an average disposable income of £191 a week – far below the UK average of £250 per week.
However, this is still significantly higher than Northern Ireland with the lowest disposable income figure at £129 per week.
But spending power in London (£326), Scotland (£261) and the East of England (£267) remains above the UK average, with “higher post-tax income and stronger job markets helping to protect households in these regions from rising prices”.
