Asda Income Tracker Shows Pessimistic Household Outlook

• Annual inflation rose to 3.4% slowing recent disinflationary trends.

• The lowest 20% of earners were once again hardest hit leaving them with a shortfall of £73.

Latest figures from Asda’s Income Tracker reveal that nearly six in ten households now feel their weekly pay packet doesn’t stretch as far as it did a year ago.

Growth in the Income Tracker slowed sharply in December, leaving the average UK household with £256 a week in discretionary income.

The deceleration brings an abrupt halt to the progress made over the previous three months, with the lowest-income households hit the hardest.

The lowest 20% of earners saw their spending power fall by 5.0% year on year leaving them with a £73 shortfall and unable to cover essential bills and everyday spending.

While even middle-earning households, typically earning between £25,000 and £41,000 a year and representing 40% of all UK households, are now also worse off after modest growth in November.

Spending power for households earning around £25,000 a year has since fallen by 7.1% compared with the same period last year, leaving them with just £12 a week to spend after essential costs.

The pessimistic outlook for households going into the new year reflects weakening earnings growth alongside a pause in disinflation, with annual inflation rising to 3.4% in December.

Housing and utilities remained the largest contributor at 4.9%, while food and non-alcoholic beverages rose to 4.5%, driven by bread and cereals, and transport costs, mainly airfares, pushed transport inflation to 4.0%.

Reacting to this month’s Income Tracker, Sam Miley, Head of Forecasting and Thought Leadership at Cebr, said: “Overall, 2025 has been a mixed year for the Income Tracker. Low inflation and strong earnings growth saw nominal discretionary incomes rise to record highs at the start of the year, before increases to employment taxes and wage floors in April increased cost pressure on businesses. This caused stronger inflation and weaker labour market conditions, prompting growth in the Income Tracker to stagnate.

“While Q4 has shown signs of recovery for household purchasing power, this has largely been down to a slowdown in underlying price pressures, rather than an acceleration in earnings growth. Looking ahead, despite an uptick in inflation in December, Cebr expects this trend to continue over the first half of 2026. Easing price pressures and weakening earnings growth are competing influences on the Income Tracker, creating substantial uncertainty for future performance.”

Asda is committed to continuing to support households navigating financial challenges in the new year and is consistently named the lowest-priced supermarket in independent price comparison surveys by both Which? and The Grocer.

The supermarket is offering new online grocery customers up to £55 off their shopping across four orders until January 31 to help customers make their money go further. Customers who spend £60 or more per order can receive £20 off their first shop, £10 off their second and third shops, and £15 off their fourth, giving a total saving of £55.

View the this month’s Income Tracker here.

Source : Asda

Image : Asda

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