Asda: Disposable Income Declined For Many Last Month

Disposable incomes fell for 60% of UK households last month, according to Asda’s latest Income Tracker, marking the first decline for middle-income families since September 2023.

The contraction follows a sharp rise in inflation, which reached 3.8% in July—the highest level so far this year—driven by sustained increases in essential living costs.

Key findings:

• The cost of essentials (food, drink, transport etc) rose by 5.1% year-on-year, putting further pressure on household budgets.

• Middle-income households (approx. £41,000 gross annual earnings) saw disposable income decline by 1.6% in July, the first drop in almost two years.

• Lower-income households experienced an 11.1% drop in spending power—resulting in a shortfall of £73 per month between earnings and essential spending.

• Although higher-income households remain more insulated – with income growth still outpacing rising costs – the gap is narrowing.

As earnings growth begins to ease and tax contributions rise, all households are likely to feel the squeeze in the months ahead, with inflation expected to stay above the Bank of England’s 2% target well into 2026.

Sam Miley, Head of Forecasting and Thought Leadership at Cebr, said: “Inflation accelerated to 3.8% in July, the highest rate since January last year. The rise was driven primarily by sharp price increases in essentials, such as food and non-alcoholic beverages.

“This has been reflected in the Income Tracker, which showed only modest growth of 2.4% in the year to July. While wages are expected to rise over the remainder of the year, persistently high inflation will put continued pressure on purchasing power, weighing on further gains in the Tracker.”

Asda remains focussed on shielding customers from inflationary pressures by investing in price cuts and keeping prices in check through its Rollback and Asda Price propositions.

Independent price comparisons – such as the Grocer 33, showed Asda had the lowest-priced basket in six of the last eight weeks, and the Which? Big Shop Price Index for July – reflect Asda’s ongoing commitment to providing unbeatable value to families.

You can read this month’s full report, here.

Source : Asda

Image : Asda

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