LEEDS, England, 2016-Sep-02 — /EPR Retail News/ — UK families had £10 more disposable income in their pocket compared to the same time last year, according to Asda’s July Income Tracker.
The average disposable income for UK households reached £202 a week, an increase of 5.4% compared to July 2015.
While the latest figures mark the 21st consecutive month of a double-digit rise in spending power, the data indicates that growth has slowed to its lowest rate since October 2014. This decline has been driven by a rise in essential item inflation (0.1%) and a slowdown in wage growth.
Asda’s Income Tracker also shows that there is a growing divide between the highest-earning and lower income households in the UK. In July 2016, the wealthiest 20% of UK families earned an average of £1,890 per week – ten times more than the lowest-earning 20%, who took home £180.
Furthermore, the gross income of the highest-earning households has grown by 2.3% since July 2015 – nearly eight times more than the lowest households.
A breakdown of gross income per bracket with percentage increase (YoY) shows that:
But the data highlights that it is not all good news for high-earning families. The rate of inflation in prices of items like, communication, subscriptions, family takeaways and rail travel, means the wealthiest bracket is finding itself spending increasingly more money. Middle income households meanwhile tend to devote a greater share of their income to products such as food and utilities – where prices are falling on a year-on-year basis – meaning they enjoyed the largest increase in disposable income in July, (5.5%) compared to the same time last year.
Elsewhere in the report, it states that the falling value of the pound could lead to higher import prices over the coming months, which is likely to have a knock-on effect on inflation levels as 2017 approaches.
And in the job market, the latest figures are showing that unemployment across the country remains at its lowest level (4.9%) in 11 years.
An Asda spokesperson said: “Our Income Tracker has made for some interesting reading this month. On one hand, it’s encouraging to see that spending power has on average increased by 5.4% since last year, while on the other hand the data demonstrates the significant gap between households when it comes to discretionary income.
“Falling food and drink prices (-2.6%) provided a welcome relief to families’ wallets across the board, and with wage growth remaining above inflation levels for the time being, households are likely to make the most of this again next month”.
Sam Alderson, Economist, Cebr, said: “Household spending growth hung in double digits in July, which -alongside brighter weather – helped to support a strong month of retail spending.
“Despite falls in confidence, the continued improvements in household finances have helped families shrug off much of the post-Brexit concern that has plagued businesses and financial markets. However, the outlook may not be so bright as rising inflation through into 2017 could place significant pressure on household budgets.”