UK households suffered yet another record drop in discretionary incomes in May and were £41.94 per week worse off compared to the same time last year, according to the latest figures from Asda Income Tracker.
The Income Tracker showed that rising inflation pushed up household spending on ‘essentials’ such as fuel, groceries, energy bills, utilities, mortgages and rent, to £532 per week – a 10.6% increase year-on-year. As a result, after paying taxes and essential bills, the average household has £202 a week in discretionary income to spare.
However, the situation for low-income households is far more acute as their disposable income has fallen by more than 100% year-on-year, leaving them with a negative disposable income figure of £58 – meaning their post-tax income does not cover the costs of essential spending. This is due to the withdrawal of the Universal Credit uplift, as well as the concentration of inflation in essential spending categories.
The Centre for Economics and Business Research (CEBR) - which collates the report on behalf of Asda - has said it expects to see a month-on-month reduction in disposable income throughout 2022, hitting a further low in the Autumn when energy prices increase.
Asda is already seeing customers change their behaviour as inflation places extra pressure on household budgets – with 44% of those recently surveyed saying they are buying more on promotions.
When asked about their shopping habits, 41% revealed they were buying less in a bid to save money, whilst 39% said they were swapping branded items for own brand products where possible.
At the start of the month Asda launched its new budget friendly ‘Just Essentials’ range to offer shoppers a wider range of everyday products items in response to the cost-of-living crisis.
Just Essentials includes a much broader range of fresh fruit and vegetables including chicken breasts, salmon portions, fishcakes and braising steak, so that customers can enjoy nutritious food on a budget. Around 100 products are currently in stores and online and the full range will be available by the end of the summer.
To help customer budgets stretch further, the retailer has also ‘Dropped and Locked’ the price of more than 100 family-favourite products. Asda consistently offers customers the best possible value and was recently named the UK’s lowest-priced major supermarket for a quarter-of-a-century by trade bible, The Grocer, at its annual ‘Grocer Gold’ industry awards.