New data from Asda’s Income Tracker reveals that UK households are beginning to recover from the cost-of-living crisis, with disposable income continuing to rise. In August, disposable income increased by 12% year-on-year, marking the fifth consecutive month of double-digit growth. After accounting for taxes and essential expenses, the average household had £247 in weekly disposable income, exceeding the previous pre-crisis peak of £246, last seen in March 2021.
While overall inflation rates have remained steady since July, inflation on food and drink saw a significant decrease to 1.3%. As the prices of essential groceries continue to decline, UK consumers are expected to see further improvements in their purchasing power.
Inflation has fallen by 5% since August 2023, contributing to the ongoing recovery in household finances. With this reduction and stabilizing spending power, many families are likely to have more available cash in the lead-up to the holiday season.
However, challenges remain for lower-income households, which are still feeling the effects of the crisis more acutely. Despite the overall rise in disposable income, the lowest earners are seeing slower improvements in their spending power. On average, these households face a weekly shortfall of £66, meaning their incomes do not fully cover essential living costs.
Pushpin Singh, Senior Economist at the Centre for Economics and Business Research (Cebr), commented on the latest Income Tracker figures: “Even with a recent deceleration in wage growth, annual wage increases are still outpacing the rise in consumer prices. With inflation down by 5% year-on-year, further gains in spending power are expected. However, as wage growth slows and inflation remains above the 2% target, the recovery process may take longer for some households.”
Asda is also stepping up its support for communities with the launch of the “Cashpot for Schools” initiative. Since its inception in early September, the program has raised over £2 million for UK primary schools. The campaign allows Asda customers to contribute 0.5% of their shopping value to a school of their choice when they use Asda Rewards, directly supporting education across the country.
