The latest data from Asda's Income Tracker indicates that UK households may curb their spending this Christmas as rising inflation impacts disposable income. The tracker, which assesses household disposable income, showed a decrease of £1.98 in October, leaving the average UK household with £247 per week to spend. This drop marks only the second decline seen this year.
The 2.3% inflation increase was mainly due to higher energy costs, following the Ofgem price cap hike at the start of October. This surge has resulted in increased expenses for housing, water, electricity, and gas. The Centre for Economics and Business Research (CEBR), responsible for the Income Tracker, anticipates that the elevated costs will lead to reduced spending power during the holiday season.
Lower-income households are particularly affected as they enter the festive period. These families experienced the smallest growth in disposable income since January, at just 1.6%. This marginal increase is insufficient to cover their essential bills, creating an average weekly deficit of £69.
Households aged 30 to 49 are facing the sharpest annual increase in essential spending, which rose by 3.8% to £765 in October. These households, typically younger families with children, are also dealing with substantial childcare costs. The essential spending hike has led to the weakest growth in disposable income for this demographic, with an increase of only 5.5% to £298 per week in October, marking their slowest growth since the start of the year.
Cebr forecasts that inflation rates will continue to exceed targets throughout the remainder of the year. Sam Miley, Managing Economist and Forecasting Lead at Cebr, commented on the situation, noting the anticipated impact of higher energy bills on consumer spending.
Asda is responding to the financial challenges faced by many families by launching initiatives and maintaining its status as the UK’s lowest-priced traditional supermarket. The retailer has reintroduced its £1 meal deal in its cafés to support individuals over 60 this winter. Asda has also been recognized for its value in various independent price comparison surveys, including the Which? Big Shop price survey and The Grocer 33 basket comparison, which now accounts for competitor loyalty pricing.
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