Recent data highlights a significant increase in disposable income for UK households amid easing inflationary pressures.
- August saw a 12% year-on-year increase in disposable income, according to Asda’s Income Tracker.
- The average UK household now enjoys a disposable income of £247 per week, surpassing pre-crisis levels.
- Food and drink inflation has slowed to 1.3%, contributing to increased spending power.
- Despite improvements, low-income households continue to face financial challenges, with a weekly shortfall of £66.
Recent findings indicate a notable improvement in the financial standing of UK households, as evidenced by a 12% rise in disposable income year-on-year for August. This marks the fifth consecutive month of double-digit expansion in disposable income, showcasing a positive trend in consumer financial health as inflationary pressures begin to ease.
The data reveals that, on average, UK households now have a weekly disposable income of £247, surpassing the pre-cost-of-living crisis high of £246 recorded in March 2021. This improvement is attributed, in part, to a slowdown in food and drink inflation, which has reduced to 1.3%. As a result, UK households are experiencing enhanced spending capabilities, potentially leading to more robust economic activity in the upcoming festive season.
Despite the positive outlook, not all segments of the population are benefiting equally. The lowest-income households continue to struggle, with their spending power increasing at a slower pace compared to others. This group still faces a weekly shortfall of £66, highlighting persistent socio-economic disparities within the country. Asda cautions that the overall improvement in financial conditions does not fully alleviate the challenges faced by these vulnerable groups.
Senior economist Pushpin Singh has provided insights into the broader economic trends, noting that while there is a deceleration in earnings growth, wage increases have consistently surpassed consumer price growth. With inflation reportedly 5% lower than the previous year, forecasts suggest further enhancements in spending power. Nevertheless, Singh warns that the momentum of growth in spending power may decelerate as wage growth continues to slow and inflation remains above the 2.0% target for a prolonged period. This scenario suggests that some households will endure the ramifications of the cost-of-living crisis for an extended duration.
In summary, while increased disposable income and easing inflation offer optimism for many UK households, economic recovery and equity remain uneven.
