A recent study has shown that one out of every five households is left with only £12 per week after covering essential expenses. The financial situation is even more dire for the lowest-earning families, with an average weekly shortfall of £73.
The research, conducted by the Centre for Economics & Business Research (CEBR), highlights the ongoing challenges many people face due to the cost of living crisis. The CEBR utilizes Asda’s Income Tracker to assess the disposable income of households after accounting for taxes and necessary bills. The latest data indicates that the average household has £258 per week remaining after meeting financial obligations, representing a marginal increase of just £8.28 compared to the previous year.
Households are experiencing these financial constraints amidst tough economic conditions, where wage growth struggles to keep pace with inflation, and escalating energy costs further strain finances. While there has been a slight improvement in disposable income due to a decrease in inflation to 2.8%, concerns persist regarding a potential increase in inflation following the economic repercussions of the Middle East conflict.
Higher-income households are seeing a growth in their available funds, attributed to a smaller proportion of spending on essential items like food and greater resilience against price hikes in everyday necessities. Sam Miley, the head of forecasting at CEBR, noted the subdued momentum in discretionary incomes, with only a 0.6% monthly growth despite a 3.3% annual increase.
Additional data from Worldpanel by Numerator indicates a slight relief in food price inflation, dropping from 3.1% to 3% in the past month. This development offers some respite to individuals striving to manage their expenses, although experts anticipate potential grocery price hikes in the near future due to the economic aftermath of the Middle East conflict.
Supermarket sales surged by 2.4% in the four weeks leading up to mid-June, coinciding with record-breaking temperatures and a prolonged heatwave in the UK. The heightened demand for summer essentials like suncare products and fresh beef burgers drove the increase in sales during this period.
