Rising bills eat into household income gains

• Spending power growth slows for a third month, as the lowest-income families face a £76 weekly shortfall to cover essential costs

Families are seeing much of their income growth swallowed up by the cost of essentials, according to Asda's latest Income Tracker.

Although household incomes rose by 3.8% over the past year, rising housing, energy and transport costs meant that spending power in real terms increased by just 2.4% - the weakest level since March.

The financial squeeze is being felt the most by low-income households, who now spend £76 a week more on essentials than they earn.

More than 90% of income for households in the second-lowest income group is now spent on essentials, leaving just £11 a week for discretionary spending.

Even middle-income families, usually best placed to absorb rising costs, are only 58p a week better off than a year ago.

Sam Miley, Head of Forecasting and Thought Leadership at Cebr, said: “Pressure on household finances looks set to persist. A higher energy price cap and dearer fuel will keep essential costs rising at an elevated rate, while cautious hiring by employers limits any offsetting boost to incomes. Rising core inflation also suggests that higher energy costs are increasingly feeding through to prices across the wider economy.”

Rachel Eyre, Chief Customer and Digital Officer at Asda, said: "Every pound saved on the weekly shop matters when budgets are stretched. With household bills continuing to put pressure on family finances and customers already planning ahead for Christmas, we're focused on helping them make their money go further. That's why we've cut the price of 1,000 products and are holding those prices until after Christmas, helping customers get great value every time they shop with us."

Asda remains committed to helping families stretch their budgets further and is consistently recognised by Which? as the UK's lowest-priced traditional supermarket.

You can read this month’s Tracker, here.