UK | Asda’s Income Tracker revealed that more than 60 percent of UK households saw their disposable incomes fall going into the new year, despite the tracker reaching a record high.
For these households, income growth lagged behind annual inflation despite slowing to 2.5 percent in December. They also did not benefit from the strong pay growth in the current job market in the same way as others.
The lowest-earning families, which comprise 20 percent of all UK households, faced a shortfall of GBP 70 per week in December as their take-home pay was still insufficient to cover bills and essentials.
While the upcoming increase in the National Living Wage may provide some relief for these households, it is unlikely to fully offset this ongoing financial gap.
Although budgets for the lowest-earning households are expected to continue to be stretched, some families had something to feel cautiously optimistic about going into the new year.
The average UK household had GBP 251 per week after covering bills and essential expenses in December, an increase of 12.1 percent compared to the previous year.
This figure represented the highest disposable income figure recorded by the tracker, surpassing the pre-cost-of-living crisis peak of GBP 247 per week in March 2021. These improvements were primarily driven by strong wage growth and a slowdown in inflation.
“The Income Tracker reached a new high in December, capping off a year of solid growth in spending power. Looking ahead, we expect further improvements to take place in 2025, driven by continued growth in real earnings,” said Sam Miley, Managing Economist and Forecasting Lead at Cebr.
“This should help to support the wider economy, by encouraging consumption. Despite these positive developments, it should still be noted that spending power is down on pre-cost-of-living crisis levels when considering values in real terms.”
With many hardworking families still feeling the squeeze, Asda has stepped in to help by launching new value propositions and continuing to invest in maintaining its position as the UK’s lowest-priced traditional supermarket.
Earlier this month, Asda announced its Big Jan Price Drop initiative, slashing the prices of thousands of everyday products. Over 2,500 household staples have been reduced by an average of 26 percent in-store and online.
