LEEDS, England, 2016-Aug-02 — /EPR Retail News/ — Families across the UK welcomed another rise in spending power in June, with average discretionary income once again reaching £201 a week, according to Asda’s monthly Income Tracker.
The latest figures revealed that families enjoyed an extra £12 a week (6.2%) on average in June, compared to the same period last year. The increase marks the 20th consecutive month of double-digit growth in spending power, with total average discretionary income remaining at a record level since the Income Tracker began in 2008.
Looking at data from across the UK, the latest figure showed that growth remained above £10 per week in all but two areas, as year-on-year growth ranged from £8 in Northern Ireland to £18 per week in the East of England over the course of Q2 2016.
Contributing to the boost to Britain’s bank accounts was the continued momentum of the labour market. Unemployment across the UK reached its lowest level (4.9%) since July 2005 – down from 5.6% in June last year.
While discretionary income rose overall, the rate of growth in spending power slowed slightly, falling below 7% for the first time in two months. Part of this can be attributed to a rise in consumer price inflation, which reached its highest rate since late 2014 (0.5%).
Transport costs also provided upward pressure on overall levels on inflation, following an increase in the cost of airfares for flights within Europe, as well as a rise in the price of petrol (2.3p per litre) and diesel (2.6p per litre) between May and June.
While essential item inflation remained in negative territory at -0.1%, the falling cost of food and drink helped to ease pressure on purse strings, with prices declining by 0.4% between May and June. In addition to this, larger household expenses such as mortgage interest payments – which fell by 0.2% over the same period – also provided some respite for UK families.
Taking a look across the nation, Welsh households saw the fastest growth in gross income (2.8%) in the second quarter of the year. In further good news, those in the North East welcomed a sharp decline in unemployment in the latest quarter which subsequently saw household income levels boosted by 2.2%. These factors helped raise spending power in these areas significantly, equating to an additional £15 per week in Wales and an extra £11 per week in the North East.
In contrast, there was a sharp fall in spending power growth in the West Midlands, falling from 7.5% to 5.4% between the first and second quarter of the year, attributed largely to a cooling across the region’s labour market in recent months.
Further insights from Asda’s Income Tracker highlighting movements in income levels across the nation revealed that:
- Households in London saw slower rates of spending power growth compared with the national average, however average discretionary income across the capital (£272) remained well above other UK regions
- Strong growth in the East of England continues to narrow the gap with London, with the region seeing positive growth (£18 per week) for the third consecutive quarter
- Scotland’s spending power grew 5.1% on the same period last year, with discretionary income reaching £200 per week
- Households across Northern Ireland experienced the smallest uplift in income in the latest quarter, with discretionary income reaching £103 a week
Sam Alderson, Economist, Cebr, said: “Whilst the latest data shows a slight slowing in spending power growth, we continue to see a picture of broad increases in discretionary incomes across the country.
“In the uncertain economic environment the UK now faces, the gains in spending power seen in recent years cannot be understated. Whilst consumers have understandably lost some confidence in recent weeks, improved finances should provide some support in navigating the uncertain outlook.”
An Asda spokesperson said: “While a rise in consumer price inflation and transport costs influenced the overall growth in consumer spending power, families across the UK continued to enjoy some buoyancy in their bank balances last month thanks to a continued fall in essential items and steady levels of wage growth.
“Building on this, record levels of unemployment throughout Britain should boost confidence, and it’s pleasing to see that this particular trend has led to upward swings in income growth across the regions and the home nations, as evidenced by the changes seen in the labour markets of the North East of England and Wales.
“With June”s Income Tracker continuing on the positive incline we have been used to over the last year and a half, it remains to be seen how recent events will affect disposable income in the coming months.”