Disposable income continues to rise despite the increasing cost of living
£3 a week increase in discretionary household income for UK families says Asda Income Tracker
- The average UK family had £155 a week of disposable income in February 2013, up £3 on the same month last year but still £4 lower than February 2011
- Falling unemployment was the largest contributor to the rise in disposable income, with 590,000 more people in employment over the last 12 months
- Rising cost of energy continues to put pressure on household budgets, with the price of gas up 7.2 per cent year-on-year
- The increasing cost of living remains a huge concern for families: mums say the issue is three times as pressing as youth unemployment and four times as pressing as violent crime
The latest Asda Income Tracker has revealed that family-spending power increased by £3 a week in February 2013, meaning disposable income has not fallen year-on-year since March 2012.
According to the latest figures, released today (Thursday 21st March), the average UK family had £155 of weekly disposable income available to them in February 2013 – £3 more than the same month last year, but £4 lower than in February 2011.
This slight improvement in disposable income was mainly driven by an increase in the level of employment over the last 12 months. The number of people in work rose by 590,000 over the course of the year to 29.7 million.
However, weak wage growth and the cost of utilities, such as gas and electricity, continued to drive up the cost of living in February. Electricity prices rose 6.4 per cent year-on-year, while the cost of gas grew by 7.2 per cent – the fastest increase since August 2012.
The cost of transport also continued to put pressure on disposable income last month, with the cost of petrol and diesel 4 pence and 3.7 pence higher in February than January respectively.
One factor easing the pressure on household budgets was food price inflation, which slowed to 3.7 per cent in the year to February from 4.2 per cent the month before.
Asda president and CEO Andy Clarke said:
“While it’s encouraging to see another modest improvement in monthly spending power, there’s no doubt that families up and down the country are continuing to feel the pinch.
“Our customers are attempting to make every penny go that extra mile. One mum told me last week, for instance, that she is putting her children to bed at 7p.m. to save on the cost of heating and half of those surveyed for our recent Mumdex report admit to only part filling up their car to save money.
“What we are hearing from our mums is that they need help with the cost of the basics – like heating, fuel and food. So while we are pleased that the planned rise in fuel duty in September no longer stands, we’re continuing to work hard to to keep down the price of these essentials, week in, week out.”
Charles Davis, Head of Macroeconomics at CEBR said:
“It is encouraging that discretionary incomes have seen year on year increases now for almost a full 12 months, as job creation helps to boost incomes.
“However the outlook for household finances remains fragile. Wage growth is likely to stay low given the weak economic environment while inflation is expected to remain elevated, pushed up by the cost of energy inputs and the effect of a weaker pound.”
The latest rise in the Income Tracker means that disposable income has not fallen year-on-year for eleven consecutive months. However, despite this increase, research carried out for Asda’s fifth Mumdex report, released last week (Friday 15th), shows that mums are still apprehensive about the state of the economy and their own family finances.
The Mumdex research- taken from a panel of 5,500 Asda mums of varying ages and backgrounds – highlights the extent of their concerns:
- Six in 10 mums say they can no longer afford to turn the heating on for as long as they need
- 50 per cent of mums say they only part fill up their car to save money
- Seven out of 10 mums say they are budgeting more now than they did a year ago and three quarters are regularly comparing product prices in supermarkets