Asda’s Income Tracker has found that 60% of UK households saw a drop in weekly disposable income in August, as rising costs for essentials like food and transport continue to outpace wage growth.
The gap between income and everyday costs is widening, said Asda, especially for lower-income households. It highlighted that these households faced a shortfall of £74 per week between earnings and what they need to spend on everyday essentials.
The retailer found that:
- Inflation remains “stubbornly high” at 3.8%, its joint-highest level since January 2024.
- Food and non-alcoholic drink prices increased for the fifth month in a row, reaching 5.1%, which was the highest level since January 2024.
- Low-income households were the “hardest hit”, with disposable incomes falling by 11.6%, 31.8% and 3.2% respectively across the bottom 60% of earners.
- Middle-income households, which it said were “typically more stable”, saw income fall for the second consecutive month, with further declines expected if inflation persists.
- High-earning households “bucked the trend” with wage growth outpacing inflation, shielding them from the cost of living pressures.
Economics consultancy Cebr, which produces the Income Tracker on behalf of Asda, has warned that if the current trajectory persists, the UK risks evolving into a ‘dual-speed’ economy, whereby earnings growth remains strong for the highest earners, while the lowest earners see their incomes flatline.
Sam Miley, head of forecasting and thought leadership at Cebr, said: “The Income Tracker showed its weakest annual growth in over two years in August, as inflation remained sticky at nearly twice the Bank of England’s target. The fact that inflation is concentrated in essential spending categories is bad news for consumers, who are seeing more of their post-tax income covering food and household bills.
“Looking ahead, there is a risk that the Income Tracker starts to decline as we head into the crucial fourth quarter, presenting a risk to business health too.”
