New Year's bang could be more of a fizzle as growth in British spending power slows
Families set for a festive hangover despite increase in disposable income for 13th consecutive month
- Average UK household had £193 of discretionary income last month, up by £14 a week compared to November 2014
- Disposable income increased for 13th consecutive month, but rate of growth slowed - from an average of £17 a week enjoyed throughout the rest of the year
- 2015 review shows spend on big-ticket items up in the first three quarters of 2015, with spending on vehicles increasing 11.5% compared to 2014
- Family fun remained a focus with spending on recreational and cultural activities rising 8.3% ahead of the festive period
With the nation ready to pop it’s cork on New Year’s Eve, Asda’s latest Income Tracker shows families will have something to celebrate - discretionary income reached £193 in November, up by £14 (7.7%) on the same time last year. This marks the 13th consecutive monthly rise due to continued low inflation, and increased employment.
However, as Santa steers Rudolph back to the North Pole it’s not just reindeers being reined in – Asda’s Income Tracker shows November’s £14 extra spending boost fell short of the £17 average we’ve seen during the rest of 2015, thanks to just a slight increase in inflation that is expected to continue into the New Year.
Still, the extra boost to wallets powered spending throughout 2015. Between January and September consumers spent a massive £861bn – up from £835bn for the first three quarters of 2014. But with Brits spending less on stocking their cupboards, many instead treated themselves to big-ticket items – particularly in the first half of 2015. The number of people who bought new wheels increased significantly with spend on car purchases up 11.5% compared to the first three quarters of 2014. Splashing cash on jewellery and watches also proved popular, increasing 9.1% on the same period last year.
It was out with the old around the home; with a 6.6% increase in spend on furniture since 2014. While gardens also benefitted from the seeds of recovery, with an 8.7% year on year rise in spending on gardens, plants and flowers in the first three quarters of the year.
However, shoppers didn’t limit their spending to material goods. As the festive season comes to a close, a review of Asda’s Income Tracker shows that Brits devoted more of their budget to dining out at restaurants with loved ones in 2015, up 3.9% compared to the same period of 2014.
Buoyed further by the steep fall in vehicle fuel costs, down 12.9% on 2014 – other recreational and cultural activities also enjoyed a boost of 8.3% in the first three quarters of 2015, with recent pantomime and party outings likely to contribute to strong growth over the year as a whole.
Asda President and CEO, Andy Clarke, said:
“The good news for customers is that pressure on household budgets has clearly eased in the run up to Christmas as a direct consequence of decreases in the cost of food, fuel and energy prices. There are also indications that customer spending has shifted this Christmas with households spending less on food and drink in 2015 compared to last year and instead families are using their increased spending power on leisure and festive fun which is understandable after a period of financial uncertainty.”
Sam Alderson, Economist, CEBR, said:
“While growth in spending power has slowed to its lowest level in the past 12 months, the boost is still considerable - particularly given that spending power has risen on an annual basis for over two years. Buoyed by these increases, households have increased spending over the past year – particularly on big ticket items such as jewellery and household appliances. However, consumers do not appear to have got carried away, with overall growth in household incomes outpacing spending growth over the course of 2015.”