- The average UK household had £169 a week of discretionary income in February 2014, up by £5 a week year-on-year, representing the fastest growth in family spending power since November 2012
- The latest increase is the fifth month in a row that families have seen their household incomes rise
- Family spending power in February was boosted by a slow down in the rate of inflation, which dropped to just 1.7% – beneath the Bank of England’s 2% target
- A fall in the cost of petrol, which is 5.1% lower than the same month last year, eased the pressure on household finances
- Family finances were also boosted by rising private sector wages, which increased 1.6% in the three months to January 2014
The latest Asda Income Tracker has revealed that families had £5 a week more discretionary income in February 2014 than in the same month the year before. The rise in discretionary income – the income left once taxes and the spend on essentials like rent, utilities and bills have been deducted – in February is the fastest increase seen since November 2012. Household incomes were boosted by two major factors including slowing inflation, helped by a drop in petrol prices, and a 1.6% increase in private sector wages, which have experienced their fastest growth since December 2012.
According to the latest figures, released today, the average UK family had £169 a week of discretionary income in February 2014 – representing the fifth consecutive month that families’ spending power has increased. The figures indicate that the benefits of economic recovery are slowly beginning to feed through to UK households as weekly discretionary incomes climb even closer to the all time high of £174 seen in January 2010.
Falling petrol prices helped to boost family spending power in February as the cost of filling up a car dropped 5.1% year-on-year. Furthermore, the cost of essential items, which rose over the past year by just 1.7% [RH1] and helped keep inflation below the Bank of England’s 2% target. However, while slowing inflation had a positive impact on household finances, families are still struggling with the cost of gas and electricity prices, which rose 5.9% and 6.9% respectively compared with the same month the year before.
While wages in the private sector grew 1.6%, public sector wages experienced slower growth, at just 0.6% in the three months to January 2014. Overall, average UK wages grew 1.3%, which represents the fastest growth since the three months to December 2012. The jobs market still remains tough with unemployment remaining largely unchanged at 7.2%. However, in comparison to last year, unemployment is down 0.7% meaning an extra 459,000 people are in work.
Rob Harbron, Senior Economist, Cebr, said:
“More favourable conditions for UK households are starting to emerge at last, as the Income Tracker saw its fastest growth rate in over a year.”
“The slowdown in inflation is helping to ease the pressure on household budgets, while the economic recovery is finally starting to feed through into wage growth, which is now starting to accelerate.”
The full report is available on ASDA’s website here
[RH1]Have made this change for accuracy (essential item costs are still up, but growing at a slower pace than previously)