Household finances edge up but many still feeling the squeeze

UK households had slightly more money left over after paying their essential bills in May compared with a year ago, but many remain under financial pressures, according to Asda’s latest Income Tracker.

The average household had £258 per week left after bills and essentials were covered – £8.28 more per week than a year ago.

However, the overall picture remains challenging, with weak wage growth, a soft labour market and rising energy costs impacting household finances.

The improvements come as inflation remains at its joint-lowest level since March 2025 at 2.8%, with food and non-alcoholic drinks inflation easing again in May.

Despite the slight boost in spending power, many households are still feeling the squeeze.

Around 1 in 5 households (20%) have just £12 left per week on average after paying essential bills, while the lowest earning 20% of households still face a weekly shortfall of about £73 after essential spending, meaning they are unable to fully cover basic costs such as food and household bills.

Higher-income households continue to see growth in the money they have left over, as essentials such as food account for a smaller proportion of their overall spending and they are better insulated from price rises in everyday essentials.

Although warmer weather may ease pressure on household budgets by lowering energy consumption, lower-income households are likely to continue facing difficult decisions, with rising living costs leaving little income available beyond essential spending.

Reacting to this month’s Income Tracker, Sam Miley, Head of Forecasting and Thought Leadership at Cebr, said:

“The Asda Income Tracker continued to show weak momentum in May 2026. While annual growth came in at 3.3%, discretionary incomes grew by only 0.6% month-on-month and remain below the levels seen in January of this year. The balance of risks for the Income Tracker’s outlook remain firmly on the downside.

The most recent labour market data show labour demand continuing to unravel, putting downward pressure on earnings growth. Meanwhile, elevated inflation is expected to be exacerbated once household energy prices are recalibrated in July. The prospect of interest rate cuts, which could drive stronger economic activity, is thus expected to be delayed at least until next year. These headwinds are likely to drive contractions in discretionary incomes from Q3.”

Asda is continuing to help families make their money go further by lowering prices on hundreds of products customers buy most, including beef mince, pork sausages, eggs, baby potatoes and baked beans.

The cuts build on Asda’s position as the UK’s cheapest full-range supermarket, with thousands of products already priced lower than equivalent items at Tesco, Sainsbury’s and Morrisons.

You can read this month’s Income Tracker here.