- Consumer spending power has fallen for families in 75% of UK regions
- Unemployment was down again in June to 4.5%, the lowest seen in the UK since the 1970’s
- A surprising fall in inflation to 2.6% provided a small relief for families in June
- Wales and Northern Ireland saw the largest decline in weekly spending power with a decrease of £5.90 and £4.60, respectively
The latest figures from Asda’s Income Tracker reveal that families in 75% of the regions across the UK experienced falling spending power in Q2 2017 compared to the same period last year.
In June, households saw spending power decline for the third month in a row. UK families had £198 of discretionary income. Whilst a drop, the decline has plateaued compared to previous months, with only a --0.2% (47p) change to the UK average compared to the same month last year.
With the summer holidays approaching, a slowdown in inflation was also welcomed by families across the country.
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Through its pulse of the nation survey, Asda found that 40% of consumers are planning ’staycation’ holidays the UK this summer and lower fuel price will provide some respite on families’ budgets as the school holidays approach
Falling oil prices have eased the pressure on fuel prices over recent months with cheaper fuel being one of the main contributors to the falling inflation rate compared to May. . Fuel is still showing inflation year on year, however it is now only 4.1% higher than it was in the same month last year.
Two categories that created additional pressure on household budgets were electricity, with a rate of inflation of 7.7% in June, and alcohol and tobacco, for which prices increased by 5.1% year-on-year.
The latest labour market data have revealed that the employment rate across the UK has risen to an all-time high of 74.9%, however wage growth has not yet followed this trend with very little movement each month. With inflation still higher than wage growth, the pressure continues to mount on families’ spending power.
Looking across the regions, families in Wales and Northern Ireland were hit the hardest in the second quarter in pound terms, as they saw a £5.90 and £4.60 fall in their average weekly spending power.
London households remained ahead of the UK average with £266 of spending power per week, however they are still £1.20 worse off than the same period last year. .
Families in the North East however bucked the trend and saw the greatest growth in the second quarter, a £3.80 gain year-on-year. Yorkshire and the Humber and the North West were the other two regions that saw positive growth for familys’ discretionary income year on year.
Unsuprisingly, with such a mixed outlook across the country, theatest insight from Asda’s pulse of the nation survey has shown that despite inflation easing in June, customers are still less optimistic about the economy. 46% of consumers believe that their disposable income will fall over the next month, whilst 78% think their day to day cost of living will increase.
Kay Neufeld, Economist, Cebr, said: “In June, the ASDA Income Tracker shows that family spending power has decreased for the third consecutive month. Although lower inflation in June eases the pressure on households’ budget somewhat, rising food prices continue to drive up the cost of essential spending.
“The comparison between Q2 2016 and Q2 2017 shows that the gains in spending power made over the second half of last year have been reversed. On a regional level, this reversal of fortunes for households was most pronounced in Northern Ireland and Wales due to higher unemployment and weaker wage growth compared to other regions.
“For families going on vacation in the UK, cheaper fuel prices will be a welcome factor holding costs down. But prices for hotels and restaurants have been on the rise for some time now and are likely to more than offset savings at the pump.”