Family budgets came under renewed pressure in March as rising prices and global uncertainty reduced household incomes, according to the latest Asda Income Tracker.
The tracker shows average household discretionary income fell by £5.32 a week compared to February, leaving families with an average of £257 per week after paying for bills and essentials.
This marks the first year-on-year contraction since 2023, signalling a shift after a period of gradual improvement.
The squeeze on budgets comes as inflation picked up again in March, driven in part by commodity price volatility following the outbreak of war in the Middle East. The latest findings reveal that:
- Annual inflation rose to 3.3%, reversing the downward trend seen at the start of the year.
- Transport costs were the biggest driver, with inflation in this category jumping to 4.7%, largely due to a sharp turnaround in fuel prices, which moved from a 4.6% annual fall in February to a 4.9% rise in March.
- The impact is being felt most acutely by low-income households. The lowest earners now face a £74 weekly shortfall between essential spending and income – close to levels last seen during the cost-of-living crisis.
- Income growth slowed across all but one UK region, as labour market conditions continued to weaken despite unemployment falling to 4.9%.
- Around 60% of households are expected to feel that their income went further a year ago than it does today.
Looking ahead, continued commodity price fluctuations are expected to keep inflationary pressures high.
Rachel Eyre, Chief Customer Officer at Asda, said:
“We know how tough it is right now for families, with many forced into choices as day-to-day budgeting become increasingly difficult. The latest Asda Income Tracker shows the reality of that financial pressure with average household discretionary income falling by over £5 compared to February. Our focus remains on supporting customers with unbeatable value on everyday essentials and the products they buy most, something Which? consistently recognises in its independent surveys.”
Reacting to this month’s Income Tracker, Sam Miley, Head of Forecasting and Thought Leadership at Cebr, said:
“Q1 2026 marked another quarter of steady growth in the Income Tracker, driven primarily by easing inflation in January and February amidst weak earnings growth. Data for March have given the first indications of how UK consumers are likely to be affected by ongoing supply disruptions from war in the Middle East.
“Unlike in the cost-of-living crisis in 2022/23, greater labour market slack reduces the risk of a wage-price spiral, which lowers the incentives for aggressive interest rate hikes from the Bank of England. Nevertheless, with disruption ongoing and no end in sight, further contractions in the Income Tracker seem likely over the rest of 2026.”
You can find this month’s Income Tracker, here.
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