Springtime spending power for families reaches milestone of £200
Highest recorded figure since Asda's Income Tracker began
- The average UK household had £200 a week of discretionary income in April – £12 more than in April 2015 - and the highest figure recorded since the Asda Income Tracker began in 2008
- Year-on-year growth in spending power has remained above £10 per week for a full yearand a half, marking 18 consecutive months of double-digit growth for families’ bank accounts
- While wage growth slowed slightly, a drop in inflation last month helped to ensure another boost to spending power
Family bank balances received another boost in April, with discretionary income reaching £200 a week according to Asda’s latest Income Tracker – an all time high since the tracker was established in 2008.
The data revealed that families enjoyed a £12 (6.3%) a week boost to spending power compared to April last year, with this rise marking the 18th consecutive month of double-digit growth.
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% fallin 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.
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 every day 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 thecoming year, the uncertainty over the EU referendum makes it difficult to forecast long term consumer confidence. ”
Sam Alderson, Economist, Cebr, said: “Uncertainty surrounding the outcome of the UK’s referendum on EU membership and the underlying health of the British economy have weighed heavily on the confidence of businesses in recent months.
“In contrast, the continuation of increasing household spending power has helped keep consumer confidence robust. As such, activity in the consumer side of the economy appears to have ridden the series of turbulent economic waves seen since the start of the year much better.”