Disposable income in decline, finds Asda
Disposable household income is in decline, while the average cost of living is increasing, according to Asda’s latest Income Tracker (AIT).
Information from the AIT has shown that weak wage growth and the cap on working-age benefits have both contributed to the slow income growth, which is now down to 2.2%. Higher energy bills, which have increased by 8.2% over the past year, have also hit consumers’ spending power.
An average UK household had £160 in disposable income each week in July 2013, yet this is down by £1 on the previous month, the AIT shows.
“Essential” items have tripled in price by 2.9% and Asda said that if there had not been a rise in income tax-free allowance in April, household disposable income would have fallen by a further £5 per week.
Yet Asda president and CEO Andy Clarke said consumer happiness was on the rise, despite the gloomy economy and poor finances.
“A ‘feel-good’ summer has contributed to a boost in retail sales, but we cannot ignore the fact that the squeeze on income growth and rising cost of living continue to pull at consumer purse strings,” he said.
Meanwhile CEBR senior economist Rob Harbron said: “Growth appears to be picking up in the UK economy, but concerns remain on how sustainable this will be.
“Highlighting these concerns, the AIT shows the extent to which household finances are still under pressure. With earnings growth remaining very weak, rapid increases in the cost of living continue to erode family spending power.”