Families spending power gets a 4.1% boost on last year, but it still remains a slow increase compared to 2018
The latest figures from the Asda Income Tracker reveal that:
- Family spending power was up by £8.21 a week year-on-year in April, a 4.1% annual increase – the slowest rate since October 2018
- Unemployment dropped further in the latest data, standing at 3.8% over the three months to March
- Income growth remains strong, with working-age households seeing a rise of 3% or higher
- Inflation jumps up as energy suppliers take advantage of Ofgem’s price cap lift
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 have shown that households have had a 4.1% boost to their weekly spending power compared to this month last year, leaving families £8.81 better off each week. However, the extra money in consumers’ pockets continues to rise at the slowest rate since October 2018, which has pulled growth back down to single digits after four months of sitting at £10 or more.
The state pension saw a change in April this year, rising by 2.6% due to the pension triple lock, which boosted pensioners’ income this month. Households aged 65-74 and 75 and over felt this with their discretionary spending power increasing by 2.2% compared to this time in 2018.
Working-age households, too, have seen a welcome increase in their gross incomes with under 30s recording a 3% rise for the month of April. 30 to 49 year-olds saw a 3.2% rise, lifting their gross weekly income to £1029, while 50-64 year-olds saw a similar 3.1% growth in their income. Growth rates have remained strong in the year to April, however when compared to the first quarter of the year, there has been a noticeable slowdown in income growth rates across the board.
Cautious moods amongst businesses when it comes to hiring and wage increases seems to be reflected in the figures, and productivity has also declined by 0.2% in the first quarter of the year. But despite this, unemployment is down in the last 3 months, with joblessness sitting at 3.8% across the UK. Firms remain cautious, however, of hiring and expanding the workforce as they continue to see a slowdown in the demand for goods.
An increase in air fares and energy prices have been attributed to pushing up the rate of inflation to 2.1% in April, up from 1.9% in March. Ofgem, the energy regulator, lifted a price cap for energy suppliers which caused a spike in prices with electricity inflation jumping from 3.8% in March to 14.1% in April while gas inflation rose from -1.6% to 7.1% in the same period.
Global fuel price increases have raised costs at the pumps, with a 4.3% year-on-year rise in fuel price inflation, the fastest rise since November 2018, which has hit the cost of essential spending.
Under 30s have seen a 3% uplift on last year to their essential spending on services and goods. Younger households as well as pensioners are often hit hardest by hikes in gas and energy prices.
However, clothing and footwear wasn’t affected by price increases, it was the only category to show negative inflation in April, at -1.9%, down from -1.6% in the previous month.
Kay Neufeld, Head of Macroeconomics, Cebr, said:
“The latest figures for the ASDA Income Tracker show that consumers continued to enjoy healthy growth in discretionary spending power in May. The tight labour market continues to be the bedrock for solid income growth which helps consumers cope with the odd price shock, such as this month’s increase in gas and electricity prices. Nevertheless, compared to the beginning of the year, we see a clear slowdown in the Income Tracker growth rate, which is partly caused by slowing wage growth and a more cautious mood among businesses. With the economy set for a slowdown in Q2, we expect this trend to continue in the coming months.”