UK | Asda's Income Tracker indicated a significant increase in the average household disposable income, reaching its highest level in almost two years. In January, the average UK household saw a year-on-year rise of 6.1 percent to £230 per week, the strongest figures since March 2022, marking the tenth consecutive month of annual growth.
Despite challenges such as elevated living costs and tighter policy conditions leading to a technical recession in the second half of the previous year, households are experiencing improvements, with early signs of recovery in 2024.
Several factors contribute to this improvement, including weaker food price inflation and changes to National Insurance contribution rates, resulting in increased take-home pay for working households.
However, the improvement is only uniform across some UK households. Middle-income households are experiencing the most significant growth, with their income rising by 15.6 percent year-on-year to £254 a week. In contrast, the lowest-earning households are witnessing a decline in discretionary income, with their income decreasing by -0.5 percent year-on-year, resulting in a shortfall of -£69 a week, indicating insufficient funds to cover essential expenses.
Sam Miley, Managing Economist and Forecasting Lead at Cebr, which produces the Income Tracker on behalf of Asda, noted that January's results were the strongest in a while, with household spending power increasing to £230 per week, driven by factors like continued earnings growth, weaker food price inflation, and the recent cut to National Insurance contribution rates. Cebr anticipates further growth in spending power in 2024, supported by a more positive economic outlook.
Asda is committed to supporting families and communities by providing better value to customers. The retailer plans to expand its low grocery and fuel prices to more communities across the UK by enhancing its convenience offering. As part of this strategy, it will open 110 Asda Express convenience stores this month to reach 1,000 UK Asda stores for the first time. Additionally, Asda has initiated a price match with Aldi and Lidl on 287 comparable grocery products and reduced prices by an average of 17 percent to match the lowest price offered by either discounter.
