- Rising essential costs (3.9%) outstrips wage growth (3.8%) weakening household spending power
- Families left with average of £260 a week left after paying bills and essentials
- Low-income households are £75 per week short of covering essential costs
Families are facing renewed financial pressure as rising living costs eat into household budgets, according to Asda’s latest Income Tracker.
The tracker, which measures how much money households have left after paying taxes and essential bills, showed spending power growth slowed to 3.4% last month – the weakest level since March.
Lower-income households continue to face the greatest challenge. Their spending power fell by 1.9% over the past year, leaving them with an average weekly shortfall of £75 between what they earn and what they spend on essentials.
Although wages continued to rise, higher transport, housing and energy costs absorbed an even greater share of household incomes, leaving families with less money available to spend. Essential costs increased by 3.9% in August, outpacing income growth of 3.8%.
With inflation rising to a five-month high of 3.1% and the Bank of England signalling that interest rates could rise again if price pressures persist, household budgets are likely to remain under strain in the months ahead.
Rachel Eyre, Chief Customer and Digital Officer at Asda, said: “When household budgets are under pressure, every pound really matters. We know our customers are working hard to make their money go further, and that’s why we’re committed to offering outstanding value across Asda’s unmatchable mix, whether they’re buying food, filling up the car or picking up school uniform.
“With Which? consistently naming Asda the UK’s cheapest supermarket for branded groceries, customers can trust they’re getting the best possible value every time they shop with us.”
Pushpin Singh, Managing Economist at Cebr, which produce the Income Tracker, said: “Growth in the Asda Income Tracker slowed further in August to 3.4%, its weakest pace since March. While earnings growth has picked up slightly, it was outpaced by a considerable acceleration in inflation.
“Inflation remains the primary risk to household spending power. Rising essential costs and the prospect of higher interest rates could place further pressure on discretionary incomes in the months ahead.”
Asda has continued to invest in keeping prices low for customers, with independent comparisons by Which? and The Grocer consistently recognising it as the UK’s cheapest full-range supermarket.
Comments are closed.