FAMILY SPENDING POWER REACHES AN ALL TIME HIGH ACCORDING TO ASDA’S INCOME TRACKER
· The average UK household had £176 a week of discretionary income in October 2014, up by £8 a week on the same month a year before and beating the previous Income Tracker record of £174 last seen in January 2010
· Household spending power has now been rising year on year for thirteen months in a row, reflecting steady growth in the country’s economy
· Families’ discretionary incomes were boosted by a number of positive factors in October including; rising wages, which finally outstripped inflation, and falling unemployment
· The cost of essentials such as food and fuel continued to fall meaning family budgets stretched even further last month
The latest Asda Income Tracker shows that family spending power increased year on year in October for the thirteenth month in a row as discretionary incomes – the income left once taxes and the spend on essentials like rent, utilities and bills have been deducted – were up £8 a week on the same month a year before.
Family spending power is now at its highest point since Asda’s Income Tracker first began tracking discretionary incomes in January 2007, surpassing the 2010 peak of £174 by £2 per week. Pressure on families’ pockets was relieved by a number of factors, all of which point to sustained and steady growth in the economy. Wages, which grew 1.3% in the three months to September compared with the year before, outstripped Consumer Price Inflation in that month for the first time since 2009, by 0.1 percentage points.
Consumer Price Inflation rose slightly to 1.3% in October, due mainly to the cost of pricey new computer games entering the market just before Christmas and airfares, which increased by 7.6%. If airfares continue to rise it is likely to affect those wishing to travel home this Christmas. However, consumers did find respite in the fact that essential item inflation still remains at its lowest in nearly five years at just 1%. As retailers continue to invest in lowering prices for their customers, the cost of essentials like food and fuel fell year on year again by 1.4% and 4.8% respectively. The warmer than expected weather this autumn also prompted retailers to offer discounts across their winter ranges with the price of clothes and shoes dropping 0.2% year on year.
There was good news for the labour market too as unemployment continued to fall, dropping 1.7 percentage points in the three months to September 2014 compared to the same point last year. In addition to unemployment reaching its lowest level since September 2008, underemployment also dropped to 16.5% from 18.4% in the same period of 2013. This meant that people working part time were able to extend their hours and boost their take home pay.
Commenting on the findings, President and CEO of Asda, Andy Clarke, said:
“I’m really pleased to see that family incomes are strengthening month on month after such a prolonged period of difficulty for household budgets. Christmas is such an important time for families, it is great that this Christmas they are less constrained than they have been in previous years.
Deflation in food costs, vehicle fuel, and clothing, are all contributing to a more positive spending outlook across the UK. I’m hopeful that these things alongside a continued fall in unemployment, freezes on energy prices, and a slowdown in mortgage payment costs, will see the recovery continue into 2015.”
Rob Harbron, Senior Economist, Cebr, said:
“The economic environment has become a lot more favourable for UK households in recent months. Growth in the cost of living has slowed to five year lows, easing pressure on budgets, and this is expected to continue in 2015
It’s also encouraging to see wage growth starting to pick up. Discretionary income levels have now regained their pre crisis peak, but this is only the start of the recovery, and risks such as interest rate rises remain on the horizon.”