Income Tracker records steady gains as unemployment and inflation remain unchanged
The latest figures from the Asda Income Tracker reveal that:
- Family spending power was £12 a week higher in March 2019 than a year before – an annual increase of 6%
- The UK has a new record high employment rate at 76.1%, supporting income growth across the country
- The cost of essential spending was kept in check in March as inflation remained unchaged at 1.9%, the lowest rate since January 2017
- Scotland recorded the largest increase in income growth, from 2.4% in Q1 2018 to 3.6% in Q1 2019 thanks to a low unemployment rate which currently stands at just 3.3%, well below the national average
The Asda Income Tracker is a measure of ‘discretionary income’, reflecting the amount of money remaining after the average UK household has had taxes subtracted from their income and bought essential items such as: groceries, electricity, gas, transport costs and mortgage payments or rent.
The full report can be found here:
New figures released by Asda show that during March 2019, average weekly spending power of UK households rose by £12 a week compared with the same month last year – the equivalent to a 6% increase, meaning that the average family has £213 of discretionary income to spend per week.
In a further boost to household incomes, the latest official labour market data shows that the rate of unemployment across the country remained steady in the three months to February to stand at 3.9%.
Moreover, the employment rate – i.e. the share of people aged 16-64 in work – remained at a record high of 76.1%.
Nominal annual wage growth (excluding bonuses) accelerated further in the last quarter, while the cost of essential spending was kept in check in March as inflation remained unchanged at 1.9%, the lowest rate since January 2017.
UK-wide annual gross income growth has accelerated considerably over the past year, rising from 2.5% in Q1 2018 to 3.4% in Q1 2019. The UK’s strong labour market, which has seen the employment rate rise to record levels and sustained low unemployment, has played a major part in boosting households incomes over this period.
This positive trend is reflected in the performance of most regions. The largest increases in income growth between Q1 2018 and Q1 2019 have been recorded in Scotland (from 2.4% to 3.6%), the South East (from 2.0% to 3.1%) and the South West (from 2.2% to 3.3%).
In some regions, however, income growth has decelerated. In Northern Ireland, increases in gross household income stood at 3.9% in Q1 2018, a pace that could not be sustained over the year. It now stands at a still respectable 3.2%. Furthermore, the North East, the East Midlands and the West Midlands have seen their income growth moderate in Q1 2019.
Inflation, as measured by the Consumer Price Index, remained unchanged at 1.9% in March.
Higher transport prices and in particular an increase in fuel price inflation exerted upward pressure on the headline inflation rate last month. These effects were offset by lower inflation for recreation and culture.
Prices for clothing and footwear continued to fall in March albeit at a slower rate than in February.
Meanwhile, annual inflation rates for gas and electricity remained unchanged from the previous month, which means households continue to benefit from falling gas prices and only modest increases in electricity prices.
REGIONS FEEL THE BENEFIT OF GROSS INCOME GROWTH ACCELERATION
Although the national Income Tracker saw its growth rate accelerate from 4.9% to 6.1% in the latest quarter, a look at the regional picture shows that growth is stuttering in several parts of the country.
Family spending power across all regions has seen an increase in the Income Tracker over the past year with the national headline figure rising to £212 in Q1 2019, up from £200 in the same quarter of the previous year.
Northern Ireland recorded the highest Income Tracker increase in Q1 2019. While the country remains at the bottom of the Income Tracker league table with an average family spending power of £114 per week, it continues to close the gap to the other regions. In Q1 2019, Northern Ireland’s family spending power was £27 lower than that of the North East, down from a gap of £30 in Q1 2018.
While households in the North East and Northern Ireland have doubtless benefitted from the tighter labour market in recent quarters, their employment rates, i.e. the share of people aged 16-64 in employment, continues to stand significantly below the national average. The gap in the employment rate between these two regions and the South West is currently 9 percentage points.
In the North East and Wales, growth in the Income Tracker slowed noticeably to 3.3% and 3.6%, respectively. Households in Greater London and the East of England also experienced slower income growth in the first quarter of the year compared to Q4 2018.
The East Midlands, Yorkshire & the Humber, the South East and the South West were the only regions to record an acceleration in the Income Tracker.
Kay Neufeld, Head of Macroeconomics, Cebr, said: “As uncertainty continues, the latest Asda Income Tracker offers some optimism for the immediate future, with discretionary incomes up across the country, inflation remaining unchanged, and a strong labour market.
“Despite this, however, there are also some clear signs that growth is starting to slow in several parts of the country with data suggesting that hiring intentions among employers are weakening and month-on-month earnings growth slowing, meaning we could see a weaking in the labour market in the near future.
“Based on this, it is likely that consumers will continue to be cautious with their discretionary spend, particularly as a futher increase in oil price is on the cards, which would exert some upward pressure on inflation and eat into households’ budgets in the coming months.”