Disposable income flat year-on-year as inflation levels fall again
No change in levels of disposable income for UK families says Asda Income Tracker
- UK families saw disposable income levels flatten out in June, with average discretionary income of £150 a week, the same as a year earlier
- Average UK household had £150 a week of discretionary income in June 2012, the same as a year earlier, but £7 down on the figure for June 2010
- Improvements were driven by low inflation but uncertainty in the wider economy and labour market continues to cause concern
- Regional disparity widens as the North of England and Northern Ireland feels strain more than South
The latest Asda Income Tracker has revealed that family spending power remained stable in June 2012 –the first time disposable income has not fallen year on year since September 2010. According to the latest figures the average UK family had £150 of weekly disposable income available to them in June 2012.
The slight improvement in disposable income recorded for June 2012 is driven by easing inflation on family budgets – with food, clothing and transport inflation all falling over the month. Annual CPI inflation fell for the third consecutive month in June, the lowest level since November 2009.
Despite the lessening impact of inflation on household budgets, when the month is put in context over two years UK families are still £7 a week down on disposable income available in 2010. High unemployment and slow pay growth continues to hold back income and create concerns for families.
Annual Income Tracker declines lessened in some regions in line with the overall UK picture, but other regions saw year-on-year increases to discretionary income. Families in the South West saw the greatest annual increase to spending power, with discretionary income rising by 1per cent over the year to Q2. However, many other regions continued to face annually declining income over the three months to June.
This was particularly the case for households in Yorkshire and the Humber, where the Income Tracker fell by 2.7 per cent, reflecting a substantial increase in unemployment in the region. The growing disparity between the north and south of England, as well as across the water in Northern Ireland, became more evident in June 2012, with a Londoner’s average discretionary income 226 per cent higher than that of families in the North East and 327 per cent in Northern Ireland.
Asda president and CEO Andy Clarke said:
“Families are no better off than a year ago, and still £7 a week worse off over two years. Our customers tell us it still feels tough out there, and with the kids starting to break up for the summer holidays mums are going to need all the help they can get to balance the books.”
Charles Davis, Head of Macroeconomics at Cebr comments:
“The latest movement in the Asda Income Tracker is good news for UK families, as households see an end for now to falling real incomes.
“However while the latest data showed falling unemployment, more forward-looking indicators suggest further tough times are ahead. With public sector cutbacks continuing to bite and businesses lacking the confidence to create new jobs, unemployment looks set to remain elevated.”