In July, financial pressures on UK households lessened slightly due to a rise in disposable incomes.
- Asda’s Income Tracker reported a 4.5% year-on-year increase in disposable incomes.
- Households experienced a growth in spending power, attributed mainly to easing inflation rates.
- Despite improvements, current disposable incomes are still below pre-crisis levels.
- Different age groups felt varying impacts, with those aged 30-49 feeling the pinch more than others.
In July, a significant shift was observed in the financial dynamics of UK households as disposable incomes rose, easing some of the prevailing economic pressures. According to Asda’s latest Income Tracker, there was a substantial 4.5% increase in disposable incomes year-on-year, marking the most robust growth since September 2021. This improvement brought an additional £9.48 per week for households, allowing an average disposable income of £218 per week, a rise from the previous month’s £210.
The increase in household spending power was largely due to a drop in inflation rates, which decreased from 7.9% in June to 6.8% in July. This reduction was primarily driven by lower energy prices and a decrease in the cost of food and non-alcoholic beverages.
However, even with this positive shift, households are still experiencing a lower disposable income level compared to the period before the cost-of-living crisis, with a notable decrease of £25.99 per week on average when compared to July 2021. This indicates that while there is improvement, the financial landscape remains challenging for many.
The impact of these economic changes varied between different age groups. Those aged 30 to 49 reported a 9.4% increase in spending on essentials like food, housing, and utilities compared to the previous year, highlighting they have been significantly affected. On average, these households allocated £726 per week to essential expenses in July, considerably higher than the general household average. Conversely, older demographics, particularly those aged 65 and above, saw their disposable incomes rise by 7.8% over the same period.
Additionally, recent strategic measures such as price cuts on over 200 own-label products by major retailers are helping alleviate some of the financial burdens faced by consumers. This includes reductions on a variety of fresh, frozen, and grocery staples, alongside extending cost-saving initiatives like kids’ meal deals, indicating a broader economic strategy to support household budgets.
Overall, while income growth offers some relief, significant financial challenges persist for UK households.
