‘Family disposable income rises marginally for first time in seventeen months’

Household disposable income has marginally returned to annual growth for the first time since October 2021, shows latest figures.

According to Asda’s Income Tracker, in April, the amount households had to spend on themselves after paying taxes and essential bills, was up by £0.37 a week compared to the same period a year earlier, which ends seventeen consecutive months of annual contractions.

Figures from the Income Tracker also reveal that inflation has fallen below 10 per cent for the first time since August 2022, slowing to 8.7 per cent in April.

However, the easing of inflation and the return to annual growth do not indicate that the cost of living crisis has peaked, as household disposable incomes continued to fall on a month-by-month basis, down from £210 per week in March to £207 per week in April. This was driven by inflation in key categories such as energy and food.

The tracker also reveals that all age groups saw their annual gross income increase in April. Those aged 75 or over experienced the fastest growth in income, with average gross incomes increasing by a huge 7.3 per cent due to the recent uplift to the state pension. Further policy changes, such as the National Living Wage, have led to gross income growth across all working age households.

Younger households spend the most and continue to experience the most shortfall, with a significant 3.4 per cent decline in disposable income for those aged 30 to 49. However, these households are expected to return to income growth once inflation subsides.

The figures comes a week after figures from Office for National Statistics showed that inflation dropped sharply in April, as energy prices retreated and the impact of Russia’s invasion of Ukraine began to drop out of the annual consumer price comparison.

Headline CPI inflation came in at 8.7 per cent year-on-year, down from 10.1 per cent in March.

Food and non-alcoholic beverage prices however continued to rise in April and contributed to high annual inflation. The annual inflation rate of food and non-alcoholic beverages eased a bit, from 19.2 per cent in the year to March 2023, to 19.1 per cent in the year to April 2023, shows the ONS figures.