Asda: Inflation Eases But Low Earners Still Feeling The Pinch

• Average household spending power reached £257 per week, up £5.67 year-on-year

• Low-income households remain £72 short of covering essential bills, leaving little room for Christmas extras

The latest Asda Income Tracker shows average household spending power rose to £257 per week, up £5.67 year-on-year, marking the third consecutive month of growth.

Inflation fell to 3.2% in November, bringing some welcome relief for households ahead of the festive season. Food and drink prices also eased, helping families stretch their budgets a little further.

However, improvements continue to be uneven. While spending power rose for the top 40% of earners, low-income families were worse off compared to 12 months ago. These households faced a shortfall of £72 per month between what they earn and the cost of covering bills and essentials.

Housing and utilities remain the largest contributors to inflation. While changes to the energy price cap helped slow annual gas and electricity inflation in October, energy bills are still higher than a year ago.

In November, gas prices were 2.1% higher and electricity prices 2.8% higher than in November 2024, leaving many households facing persistently high living costs as winter sets in.

Although inflation remains elevated, price growth did ease notably in November, marking the second consecutive month of year-on-year deceleration. Food and drink inflation slowed sharply after accelerating in October, falling by 0.8% to 4.0% in November.

Looking ahead, inflation is expected to continue easing into the new year. However, earnings growth is also forecast to slow further into 2026, meaning improvements in household finances may be constrained as a more favourable inflation outlook is offset by weaker pay growth.

Reacting to this month’s Income Tracker, Sam Miley, Head of Forecasting and Thought Leadership at Cebr, said:

“Last month’s inflation data show that price rises, especially for food, were slower than in recent months, contributing to an increase in the Income Tracker for some households, but not all. However, the labour market continues to loosen, meaning that growth in spending power will be dependent on inflation slowing into the new year.

“Inflation will not be the only driving factor, however. Some policy announcements from the recent Budget will materially affect the outlook for spending power. Lower income households will welcome the announcement that the two-child benefit cap is to be removed from April 2026, while support for energy bills will be felt more universally.”

Asda remains committed to shielding families from inflation and recent research by Which? confirmed that Asda has the lowest inflation of any UK supermarket, including both discounters.

Asda was also recently the UKs best value supermarket by The Grocer Magazine for a festive-basket, and unlike other full-range supermarkets, its low prices are available to all shoppers and not just those with a loyalty card.

You can view this month’s Income Tracker, here.

Source : Asda

Image : sergeyryzhov / iStock / 517010420

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