Household budgets face festive squeeze

With Christmas just days away, November’s sharp rise in inflation is expected to dampen festive spirits and restrict spending – despite household’s being better off compared with last year.

November marked a second consecutive month of faster price rises according to the latest figures from Asda’s Income Tracker, with families across the UK continuing to face rising inflationary pressures.

The Consumer Price Index (CPI) accelerated to 2.6% in November – up from 1.7% in September and 2.3% in October – driven by the transport sector and higher clothing and footwear prices.

CEBR, who produce the Income Tracker on behalf of Asda, has forecast that inflation is set to remain above the 2.0% target in the coming months, with energy prices and wage growth responsible for driving further higher essential costs.

Despite inflationary pressures, household spending power continues to improve year-on-year. Average household disposable incomes grew by 10.5% in November, marking six consecutive months of double-digit increases.

The average UK household was £23.74 per week better off in November compared to a year earlier and had £249 per week to spend after paying bills and essentials, providing some relief for families as they get ready for the big day.

Reacting to this month’s Income Tracker, Sam Miley, Managing Economist and Forecasting Lead at Cebr, said: “The Income Tracker saw a slowdown in growth in November, driven by accelerating inflation. That said, spending power has continued to increase, with the Tracker having exhibited double-digit growth for sixth consecutive months.

“Spending power amongst households has seen a gradual improvement throughout the year, which is welcomed ahead of the festive period. Nevertheless, consumer expenditure over Christmas is still expected to be held back relative to pre-pandemic levels amidst elevated inflation and the lingering effects of the cost-of-living crisis.”

With Christmas just around the corner and budgets tight, Asda is supporting families with their big Christmas shop with the lowest ever prices on its seasonal veg.

Until Christmas Eve, Asda customers will be able get 1kg carrots, 500g sprouts, 360g broccoli, 500g parsnips, and for the first time 2kg potatoes, all for the Asda Price of 8p each until Tuesday 24th December – with no loyalty card necessary.

It's not just in the aisles where Asda customers can find Asda Price over the festive period. The retailer recently brought back its popular café ‘Winter Warmer’ £1 meal deal to support over 60’s as they continue to face increased financial pressures during the colder winter months.

You can view this month’s Income Tracker, here.