EconomyNews

Inflation drives disposable income to ‘lowest ever level’

Low-income households have seen disposable income decline by over 100% year-on-year, leaving them with a negative disposable income figure of £58

Household discretionary income has fallen -17.2% in May to £41.94 a week (equivalent to £167.76 per month), marking another “record” low and the seventh consecutive month where discretionary income for the average UK household has dropped.

According to Asda’s Income Tracker, 20% of households now have ‘negative discretionary income’, meaning their income no longer covers essential spending.

The tracker found that rising inflation pushed up household spending on essentials to £532 per week, up 10.6% year-on-year, on items such as fuel, groceries, energy bills, utilities, mortgages and rent.

After paying taxes and essential bills, the average household has £202 a week in discretionary income to spare.

However, low-income households have seen disposable income decline by over 100% year-on-year, leaving them with a negative disposable income figure of £58.

Asda said this means their post-tax income does not cover the costs of essential spending, due to the withdrawal of the Universal Credit uplift, and the concentration of inflation in essential spending categories.

It added that it is already seeing customers change their behaviour as inflation places extra pressure on household budgets, with 44% of those recently surveyed saying they are buying more on promotions.

Some 41% revealed they were buying less in a bid to save money, whilst 39% said they were swapping branded items for own brand products where possible.

Back to top button
[class^="wpforms-"]
[class^="wpforms-"]