Income tracker growth close to zero as households see a decline in wage growth

  • The Asda Income Tracker reveals that families had £200 of discretionary income in March, only £2 more than the same time last year
  • Two out of five age groups in the UK saw negative spending power growth, with 65 to 74 year olds seeing the largest decline
  • Income growth for the average household was down to 2.2% year on year, the weakest since 2014
  • Customer insight shows that nearly 80% of consumers think the cost of living will rise over the next month

The latest Asda Income Tracker revealed that in March, families had £200 of disposable income available each week. Even though the data showed disposable income was up year on year, growth in the spending power was only 1.1%, the weakest annual growth in over 3 years.

The March tracker also showed that wage growth has stalled over the last month, with the average household income now only 2.2% higher than it was in March 2016 - the lowest rate of growth since July 2014. However, with the new National Living Wage increasing on April 1st , there may be some relief for households, especially those over 25.

Click here to see the latest reoport:

The latest tracker provides a breakdown of the data by age groups splitting UK households into five different brackets. Whilst the data shows that all five groups are still showing positive income growth overall, those over the age of 64 have seen a decline in their disposable income since March 2016.

The below chart shows the average weekly income along with average spending power and growth in spending power year on year of each age group:

Income Bracket

Weekly income

Weekly income growth

Spending power

Spending power growth

Under 30’s

£781

+2.0%

£155

+0.7%

30 to 49

£967

+2.2%

£244

+2.2%

50 to 64

£897

+1.9%

£265

+0.7%

65 to 74

£641

+1.4%

£208

-0.8%

75 or over

£461

+1.3%

£170

-0.4%

Whilst the Income Tracker shows disposable income remains in growth, Asda’s Pulse of The Nation results suggest that customers have a less positive outlook on the future of their disposable income and the economy. In a poll of 1000 customers, 45% of customers believe their spending power will fall over the next month.

Asda asked the same group what they think will happen to the cost of living over the next month. Only 1.6% of respondents believe that their cost of living will fall, while 81.2% are certain their cost of living will increase going forward.

The cost of living is once again the main factor for the slowing growth in spending power. Petrol prices were up by 17% since the same period last year, which heavily impacted the now steadying inflation rate of 2.3%. In March, inflation was higher than wage growth, which is a large contribution to the slowing growth in disposable income, as the cost of living closes the gap on household incomes.

Along with higher prices for fuel and for transportation in general, an increase in food prices contributed to the rising cost of living. The cost for household gas and air fares were some of the few items included in the Income Tracker to deflate compared to last year. Due to the timing of Easter, air fares were 23% cheaper than last year and gas cost 2% less than in March 2016.

Kay Neufeld, Economist, Cebr, said:
“Although the rise in headline inflation took a break in March, spending power has been squeezed by a slowdown in wage growth, which remains very weak and has actually fallen below the rate of inflation.

“While spending power growth is still just positive, the coming months could see the first falls in the Asda Income Tracker since September2013.

“Rising prices for transportation, hotels and restaurants and communication have weighed on families’ budgets for months now but in March, also prices for food and non-alcoholic drinks have risen over their 2016-levels. This is especially worrisome for households on smaller budgets who spend a bigger share of their income for essentials, such as pensioners”.

ENDS