Asda’s Income Tracker: September spending growth dropped to under £10 for the first time in almost two years

  • September spending growth dropped to under £10 per week – the first time since October 2014
  • Families across the UK had £201 of discretionary income per week in September – a rise of 4.7% compared to 2015
  • Wage growth remained flat as pace of inflation continued to rise
  • Discretionary income in Scotland reached £204 per week, overtaking the UK average

LEEDS, England, 2016-Oct-29 — /EPR Retail News/ — The latest figures from Asda’s Income Tracker reveal that annual spending growth dropped to under £10 for the first time in almost two years during September.

UK families had £201 of discretionary income last month, £9 (4.7%) more than the same period last year, however these figures mark the first time in 22 months that consumers have not seen double digit growth in discretionary income.

Contributing to this decline was the increase in essential item inflation which rose 0.4% in September – the largest increase since November 2014 – driven mainly by a rise in essentials such as clothing and footwear, and housing and utility bill costs. Due to the weakening pound, the price for vehicle fuel also rose 1.4%.

With the value of sterling expected to remain weak, rising prices for imported goods will contribute to a higher rate of inflation over the coming months.

An increase in restaurant and hotel prices, the cost of communications such as broadband and mobile bills, and alcohol and tobacco costs also contributed to the slowdown in spending power growth.

In contrast, food and non-alcoholic drinks bucked the trend in September, as prices fell on average by 2.3% year on year – a 0.1% decrease on prices seen in August.

In line with trends seen throughout the year, wage growth and unemployment remained flat over the last month, with wage growth staying slightly ahead of inflation. However, if inflation continues to rise at the same rate as predicted, it could eclipse wage growth and leave consumers with less income in their pockets by the middle of 2017.

Looking across the regions, the last quarter has provided good news for Scottish families, with Scotland overtaking the UK average as households boast an average disposable income of £204 per week.

There was also a more positive outlook for the North East, which experienced the fastest growth in gross income out of all the regions courtesy of a 3.2% increase over the last quarter. In previous months the North East had been lagging behind the UK average, however the latest data signals that the region is catching up.

While increases in discretionary income were smaller than those seen in previous quarters, both Wales and Northern Ireland posted high annual growth rates for the third quarter, up £14 and £8 respectively.

Meanwhile, the South West and North West both saw growth rates for gross income decline between the second and the third quarter of this year– a trend caused in part by an increase in unemployment.

An Asda spokesperson said: “As a retailer, it’s encouraging to see that UK families were able to benefit from a decline in food prices during September, especially as inflation and a weakened pound raised the cost of other essentials items.

“Consumers are still £9 better off than the same period last year, however the drop into single digit spending power growth for the first time in almost two years will cause some concerns for consumers, so we will be watching the trends carefully over the coming months.”

Kay Neufeld, Economist, Cebr, said: “Household incomes continue to increase, but rising inflation is starting to take its toll on spending power. The weak pound means that price growth is going to accelerate further in the next months, increasing the cost of the weekly shopping.

“In September, for the first time in nearly two years, households’ weekly spending power has risen by less than £10. After a long period of unusually low inflation, we can expect to see price increases for many essential items over the next months. For 2017, decreases in spending power cannot be ruled out.”

Source: ASDA

Asda’s Income Tracker: The average UK household had £200 a week of discretionary income in April

  • The average UK household had £200 a week of discretionary income in April – £12 more than in April 2015 – and the highest figure recorded since the Asda Income Tracker began in 2008
  • Year-on-year growth in spending power has remained above £10 per week for a full year and a half, marking 18 consecutive months of double-digit growth for families’ bank accounts
  • While wage growth slowed slightly, a drop in inflation last month helped to ensure another boost to spending power

LEEDS, England, 2016-May-31 — /EPR Retail News/ — Family bank balances received another boost in April, with discretionary income reaching £200 a week according to Asda’s latest Income Tracker – an all time high since the tracker was established in 2008.

The data revealed that families enjoyed a £12 (6.3%) a week boost to spending power compared to April last year, with this rise marking the 18th consecutive month of double-digit growth.

Contributing to this latest increase in disposable cash was a fall in the overall levels of inflation. Consumer price inflation dropped to 0.3% – the first fall in the headline rate of inflation since 2015 – while essential item inflation fell by -0.2%, helping to mitigate the effects of slowing wage growth.

In fact, annual wage growth for families remained below the levels recorded a year ago, in spite of regular pay increasing by 2.1% between January and March. However, this is likely to change in the coming months following the introduction of the National Living Wage in April.

Looking across other areas affecting inflation, there was an annual drop in the price of transport (-1.3%) and vehicle fuels (-7.5%). And it wasn’t just domestic travel that benefitted last month. With a 3.2% fall in the cost of air transport prices over the past year, it gave holiday-makers a great opportunity to escape to warmer climates.

Meanwhile, changes to social housing rents also contributed to the overall drop in inflation. Following the Government’s announcement last summer, housing associations have started to cut social housing rents by 1% annually from April this year.

In contrast, prices for cultural events and services rose by 3.8% between March and April, making it more costly for those families heading to the cinema or streaming their favourite series. However, food and drink prices are down -2.5% on last year, helping to ease the impact of these price increases.

Overall, the April Income Tracker demonstrates that as discretionary income continues to grow month on month, the outlook for households remains positive. This is despite uncertainty in business confidence due to the upcoming EU Referendum.

Andy Clarke, Asda president and CEO said: “April was the first time that discretionary income reached the £200 level since the Asda Income Tracker began, which is a significant milestone for consumer spending power. Double-digit growth in household income is clearly good news for UK consumers, although we continue to see them take a prudent approach to spending on every day items.

“Looking ahead, the outlook remains cautiously optimistic, which is encouraging and should give consumers a boost as we head into summer. Although, whilst inflation is likely to recover over the coming year, the uncertainty over the EU referendum makes it difficult to forecast long term consumer confidence.”

Sam Alderson, Economist, Cebr, said: “Uncertainty surrounding the outcome of the UK’s referendum on EU membership and the underlying health of the British economy have weighed heavily on the confidence of businesses in recent months.

“In contrast, the continuation of increasing household spending power has helped keep consumer confidence robust. As such, activity in the consumer side of the economy appears to have ridden the series of turbulent economic waves seen since the start of the year much better.”

Read the full report here.