The average UK household had £200 a week of discretionary income in April, according to Asda – the highest figure recorded since the supermarket chain launched its Income Tracker in 2008.
Year-on-year growth in spending power has remained above £10 per week for a full year and a half, marking 18 consecutive months of double-digit growth for families’ bank accounts
The data revealed that families enjoyed a £12 (6.3%) a week boost to spending power compared with April last year. Contributing to this latest increase in disposable cash was a fall in the overall levels of inflation. Consumer price inflation dropped to 0.3% – the first fall in the headline rate of inflation since 2015 – while essential item inflation fell by -0.2%, helping to mitigate the effects of slowing wage growth.
In fact, annual wage growth for families remained below the levels recorded a year ago, in spite of regular pay increasing by 2.1% between January and March. However, this is likely to change in the coming months following the introduction of the National Living Wage in April.
Looking across other areas affecting inflation, there was an annual drop in the price of transport (-1.3%) and vehicle fuels (-7.5%). And it wasn’t just domestic travel that benefitted last month. With a 3.2% fall in the cost of air transport prices over the past year, it gave holiday-makers a great opportunity to escape to warmer climates.
Meanwhile, changes to social housing rents also contributed to the overall drop in inflation. Following the Government’s announcement last summer, housing associations have started to cut social housing rents by 1% annually from April this year.
In contrast, prices for cultural events and services rose by 3.8% between March and April, making it more costly for those families heading to the cinema or streaming their favourite series. However, food and drink prices are down -2.5% on last year, helping to ease the impact of these price increases.
Asda said that overall, the April Income Tracker demonstrates that as discretionary income continues to grow month on month, the outlook for households remains positive. This is despite uncertainty in business confidence due to the upcoming EU Referendum.
Andy Clarke, Asda president and ceo, said: “April was the first time that discretionary income reached the £200 level since the Asda Income Tracker began, which is a significant milestone for consumer spending power. Double-digit growth in household income is clearly good news for UK consumers, although we continue to see them take a prudent approach to spending on everyday items.
“Looking ahead, the outlook remains cautiously optimistic, which is encouraging and should give consumers a boost as we head into summer. Although, whilst inflation is likely to recover over the coming year, the uncertainty over the EU referendum makes it difficult to forecast long term consumer confidence.”