Disposable income tighter than ever in run up to Christmas
Families had almost £50 a month less to spend on Christmas presents in November, compared to the same month in 2010
- UK families were £1 a week better off in November 2012 compared to the same month a year earlier, but £12 less than two years ago
- The average UK household had £146 a week of discretionary income in November 2012, 0.6% up on the year before
- Although this is the sixth consecutive month of annual growth, it is a slowdown from the £4 year-on-year boost seen in September
- As many as 1 in 10 workers are estimated to be underemployed, or working fewer hours than desired and as such, earnings growth is slow
The latest Asda Income Tracker has revealed that family spending power improved for the sixth consecutive month in November, but at a much slower rate than seen previously.
The past six months of rising real discretionary incomes follows 19 months in a row of real discretionary income declines previously. The latest figures show the average UK family had £146 of weekly disposable income available to them in November 2012 – £1 a week better off than the same month last year.
Despite the rise, when the month is put in context over two years UK families are still £12 a week down on disposable income available in 2010 – it’s clear that budgets are still under pressure and robust growth in family spending power remains elusive.
The latest only-marginal increase on the Income Tracker was due to persistently high inflation in the cost of essential items combined with low wage growth. Although real incomes are not being eroded by the significant amounts that the Income Tracker showed in late 2011, cost pressures look set to remain. Inflation is expected to be kept elevated next year by food and utility price increases.
Food products were the largest contributor to increases in the cost of living in November, with prices rising over the past year by 3.9 per cent. This is the fastest increases in food prices since April 2012 and reflects poor crop yields due to bad weather this year.
Although electricity and gas prices remained down compared to a year before, increases in utility tariffs in November acted to push up the cost of living from October’s level. Further utility price increases are expected in December and January from the remaining three of the big six energy providers, pushing up bills during the winter months.
However, a reduction in petrol and diesel prices in November combined with the scrapping of the fuel duty increase in January is welcome news for households with cars.
Looking ahead to next year, the Income Tracker shows weak economic conditions are likely to prevail and it is unlikely that earnings growth will pick up significantly in 2013.
Asda president and CEO Andy Clarke said:
“2012 has been a mixed economic picture for families, with improvements in disposable income seen during the summer months almost wiped out by the rise in commodities and little or no income growth. However we have also seen stabilisation of year-on-year income growth, which is positive to see.
“Our Mumdex report shows that while families are short on cash they’re also short on optimism, with only one in 10 saying the news about the UK coming out of recession has made them feel more positive about the UK economy, and two thirds predicting it will get worse still in 2013.
“However it’s clear that mums are determined to make this Christmas the most magical ever, re-balancing their budgets to protect the things that will make the big day extra special – presents for kids and Christmas dinner with all the trimmings.”
Rob Harbron, an economist at Cebr said:
“As 2012 draws towards its conclusion it is encouraging to see the relative stabilisation of the Income Tracker in November this year, compared to the £13 annual reduction in November 2011.
“However, pressures on household budgets do remain and consumers still face a difficult road ahead. Price inflation on essential items is likely to be elevated in 2013 while weak economic conditions will hold back wage increases. Robust growth in family spending power is expected to remain elusive.”