Families now have £16 more in their pockets as spending power takes another leap.
With £16 more in their pockets each week to spend on the things they want, rather than the items that they need, families are better off today than they have been for over five years according to Asda’s latest monthly Income Tracker. Brits had £185 per week to spend on small luxuries like cinema tickets and eating out to help beat the January blues – almost 10% more than they had this time last year.
The cost of filling up the tank and stocking up on groceries fell year-on-year by 16.2% and 2.5% respectively in January and led to the lowest levels of consumer price inflation seen since the 1960s. Essential item inflation went into negative territory, or “deflation”, for the first time in six years, falling -0.1%, meaning that today £1 now buys you more than it did this time last year.
Household energy prices also fell in January, dropping by 2% compared to a year ago, as energy firms followed in the footsteps of petrol stations and started passing on the benefits of falling oil prices to customers – a trend that is set to continue.
With gross household incomes growing 2.6% year on year, Brits are not only earning more money than they were this time last year, but their incomes are stretching even further, meaning they are getting more bang for their buck as the price of goods stay the same or fall.
As the economy picks up, businesses are beginning to open up their doors and look for new hires. As a result, the UK is benefiting from record levels of unemployment, not seen since July 2008. The unemployment rate fell to 5.7% in the three months to December 2014, down 1.5 percentage points on the same period in 2013, which means an extra 600,000 people are now in work.
Sam Alderson, Economist, Cebr, said: “With wages rising and inflation likely to remain subdued for much of the year, households are expected to provide a key driver of growth for the UK economy in 2015. However, buying habits have evolved in the tough years following the financial crisis and, until households truly feel confident in the sustainability of their own economic recovery, shoppers will continue to try to squeeze more value out of their spending.”