Asda Income Tracker: UK families had £201 in discretionary income to spend in August

LEEDS, England, 2016-Oct-03 — /EPR Retail News/ — UK families had £201 in discretionary income to spend in August according to the latest figures from the Asda Income Tracker, released today (30 September 2016).

The figures mark the 22nd consecutive month of double-digit growth in pound terms, with households benefiting from an extra £10 per week compared to the same period last year.

But whilst the positive figure suggests good news for spending power year on year, the data also shows that the rate of growth has slowed month on month in 2016, with disposable income staying largely flat for the past five months.

While essential item inflation has remained at near-zero levels and Consumer Price Inflation is holding steady at (0.6%), rising input costs and slowing wage growth mean that monthly spending power is not growing as quickly as seen previously.

Other factors impacting spending power are increased transport costs – up 0.9% over the month of August and an increase of 0.9% in food prices. Families searching for flights to warmer climates were disappointed with airfares rising for European routes. Meanwhile, manufacturer costs climbed at the fastest annual rate in almost five years, suggesting that further inflationary pressure could be around the corner.
The report also suggests that as prices are expected to continue to rise, headline inflation will move towards the Bank of England’s 2% target for 2017.

On the plus side, the report, compiled each month by CEBR, noted that a cut to interest rates helped to offset the rising costs and resulted in a further fall in monthly mortgage payments. And the uncertainty – triggered by the results of the EU referendum – doesn’t appear to have impacted shopper behaviour at the tills.

In the labour market, the picture also remained relatively positive, as the rate of unemployment across the UK held steady at 4.9% and wage growth remained well above the level of inflation. However, records show that regular earnings growth (excluding bonuses) dropped to the lowest level since the start of 2016 (2.1%), despite the introduction of the National Living Wage in April.

An Asda spokesperson said: “This month’s report is a mixed one for families. On the one hand it’s encouraging that we continue to see a rise in spending power, courtesy of low levels of essential item inflation, and cuts to interest rates. However, on the other hand, there are some trends beginning to emerge that consumers should be mindful of.

“With inflation predicted to creep up as we head towards 2017 and the potential for a continuation in the rising costs of some essentials, families will be watching their wallets with interest over the coming months.”

Sam Alderson, Economist, Cebr, said: “UK households have continued to help to drive economic activity in the months following the referendum, clearly supported by further robust increases in household spending power.

“However, whilst the initial turbulence has been navigated, improvements in household finances have slowed, a process that could accelerate if rising production costs begin to feed into prices at the tills.”

Source: ASDA

Asda’s July Income Tracker: UK families had £10 more disposable income in their pocket compared to the same time last year

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:

Income Tracker August 2016

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.”

Source: ASDA