Average household disposable income in the past weeks was the highest it has been in almost two years, shows recent figures.
According to latest figures from Asda’s Income Tracker, average UK household saw their disposable income rise by 6.1 per cent year-on-year to £230 per week in January, marking the strongest figures since March 2022 and the tenth consecutive month of annual growth.
Despite elevated living costs and tighter policy conditions leading to a technical recession in the second half of last year, households are now beginning to see some improvements, with the early outlook for 2024 showing signs of recovery.
Factors such as weaker food price inflation and the recent change to National Insurance contribution rates have improved the take-home pay for working households.
However, it is not an equal picture of improvement across UK households. Middle income households are witnessing the most robust growth as result of these improvements. Their income grew by 15.6% when compared to the same period a year earlier, to £254 a week.
In stark contrast, the lowest earning households are still the only group witnessing a fall to negative discretionary income. Their income decreased by -0.5 per cent year-on-year, with a -£69 a week shortfall. This means that their take home pay is not enough to cover spending on bills and essentials.
Sam Miley, Managing Economist and Forecasting Lead at Cebr who produce the Income Tracker on behalf of Asda, said, “January’s Income Tracker results were the strongest for some time, with household spending power increasing to £230 per week.
“This improvement was driven by a number of factors, including continued earnings growth, weaker food price inflation, and the recent cut to National Insurance contribution rates. Cebr expects spending power to continue growing in 2024, supported by a generally more positive economic outlook.”
