Uk household spending power drops by £44 a week - report
With UK inflation rising and costs spiralling, consumer spending power continues to decline. Household disposable income fell by a record £44 a week in June, marking its eighth consecutive month of decline, according to supermarket chain Asda’s monthly income tracker.
That means the average household was £175.80 worse off last month compared to a year ago.
Disposable income fell to its lowest level in five years, with the average household left with £200 to spend, the report, produced by the Centre for Economics and Business Research for Asda, also shows.
Meanwhile, a fifth of households have a shortfall of £60 every week between that they earn and what they need for essential spending. This means consumers will be more and more on the look out for discounted goods and flash sales and will also most likely to be cutting back on discretionary items like fashion and cosmetics.
The drop in disposable income was recorded across all UK regions, with the biggest falls seen in Wales and the northeast of England and the smallest declines in London and the southeast.
Consumers cut back on essential and non-essential spending in June, another report on spending by Nationwide building society also shows, The Times reported. Spending fell by an average of 4%, driven by a 6% decline in spending on non-essentials and a 3% fall in essential spending. Spending on nearly all non-essential categories fell.
Mark Nalder, head of payments at Nationwide, said: “Following a peak in spending during May, our data suggests households have started to cut back across the board and where they can. This is happening as we enter the summer period where customers will want to enjoy themselves, so it will be interesting to see how these often conflicting interests are balanced.”
He added: “As we head into the holiday season, we expect budgeting to continue being a feature as the nation prepares for even higher costs with inflation continuing to climb and the energy price cap rising again this autumn.”
Analysts expect the rate of price rises will speed up until October, when it is expected to peak at about 12%. Winter energy bills, which are expected to have more than doubled from the previous year, will drive the jump in inflation, forecasters have warned.
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