Financial pressures facing households in the UK eased slightly last month, with a 4.5 per cent increase in disposable incomes year-on-year ‒ the strongest annual growth rate since September 2021, Asda’s latest Income Tracker suggests.
In July, the amount households had to spend on themselves after paying taxes and essential bills was up by £9.48 a week compared to the same period a year earlier. Compared to the previous month, disposable income picked up by £6.09 per week, taking the average disposable income to the highest it has been since March 2022 at £218 per week.
The improvement in household spending power was due to the easing of inflation, down to 6.8 per cent in July compared to 7.9 per cent the previous month. This was predominantly due to lower energy prices and a fall in some food and non-alcoholic beverage prices.
However, despite these recent improvements, family disposable income remains firmly below the levels experienced prior to the cost-of-living crisis – down by £25.99 per week for the average household compared to July 2021.
There are also notable differences between households, with those aged 30-49 feeling the pinch the most as their spending on essentials, such as food, housing costs and utility bills, was 9.4 per cent higher in July compared to a year earlier. On average, these households spent £726 on essentials per week in July – £135 per week more than the average spend on essentials for all households.
In contrast, older households aged 65+ enjoyed a 7.8 per cent increase in average disposable incomes in July compared to a year earlier. This reflects their stronger gross income growth following the recent uplift to the state pension and smaller rises in the cost of essentials.