Pressure eases as disposable income sees slight rise

The financial burden facing many UK families eased in August, as average household disposable income reached a 17-month high, says a recent report.

According to the latest figures from the Asda Income Tracker, UK households had £14.27 more to spend on themselves per week after taxes and essential bills, compared to the same period in 2023.  This meant average disposable income was the highest it has been since March 2022, at £224 per week.

Asda said the improvement was primarily driven by strong gross wage growth and the unexpected slowdown of inflation for the third consecutive month. Annual inflation fell to 6.7 per cent in August, with food and non-alcoholic beverages being the largest contributor to the slowdown.

However, it noted that these improvements are not felt equally, as disposable income fell for 60% of UK households in August compared to 2022 – remaining below the levels experienced before the cost-of-living crisis.  And compared to August 2021, disposable income was down by £19.48 per week for the average household.

The tracker indicates that lowest earning households are still bearing the brunt of the cost-of-living crisis, with a deficit of £72 in disposable income per week – meaning their take home pay is not enough to cover spending on bills and essentials.  In contrast, the highest earning households are enjoying further growth, with disposable rising by 4.8 per cent year-on-year in August to £790 per week.