Published on August 10th, 2013 | by The GC Team0
Disposable household income remains flat for UK families
Figures released today show that family spending power remained unchanged year-on-year in June, due to rising inflation and persistently weak wage growth.
According to the latest Asda Income Tracker, the average UK family had £160 of weekly disposable income available to them in June 2013, up by £5 a week from the same month two years ago but remaining well below its peak of £165 seen in February 2010.
A weak increase in the average UK wage was a key factor behind this stagnation in discretionary spending power, with average pay excluding bonuses up just 1% in the three months to May. This was a third of the rate of essential item inflation (3%) and only marginally better than the 0.8% growth – an all-time low – seen in the three months to March.
Had it not been for the recent (April) rise in the income tax-free allowance – from £8,105 to £9,440 – household disposable income would have fallen even further, by an additional £5 a week.
The continued rise in inflation of essential items, up 0.1% to 3.0%, also added to the squeeze on household finances. The cost of gas and electricity, for instance, were up 8.3% and 7.7% respectively, compared with a year ago, while clothing prices also increased 3.1% – the highest rate since March 2012.
Petrol and diesel prices, which have been in negative or negligible growth for much of the past six months, have also started to rise year-on-year again, up 1%, putting further pressure on household finances.<P>
There was good news for homeowners, though, with the cost mortgage interest payments falling to 3.2% year-on-year – the lowest level since November 2012.
Asda president and CEO Andy Clarke said: “Although customers don’t seem to be any better off than they were this time last year, a positive rise in retail sales indicates a return to cautious spending.
“It is unlikely that consumer confidence will be fully restored until we see a significant improvement in family finances, but the good news is that the cash in our customers’ pockets appears to be stabilising.”
Rob Habron, Economist at CEBR, added: “Although green shoots are emerging for the UK economy, with growth looking to have continued across Q2 2013, the economic environment remains tough for households.
“With the pace of income increases remaining below growth in the cost of living, the squeeze on household finances is ongoing. Strong price rises are still being seen in essential items such as utilities and clothing, while petrol prices are now putting further pressure on family spending power.”