UK household spending power hits six-month low

UK household spending power reached a six-month low in August as the rising cost of essential goods and services outpaced wage growth. According to the Asda Income Tracker, essential costs increased by 3.9% year-on-year, while income growth stood at 3.8%.

On average, families were left with £260 per week after paying for taxes and essential bills such as housing, energy, and transport. The impact was more severe for lower-income households, whose spending power fell by 1.9% over the past year, resulting in an average weekly shortfall of £75 between earnings and essential expenses.

Economic analysts suggest budgets may remain under pressure as inflation rose to a five-month high of 3.1%. Additionally, the Bank of England has indicated that interest rates could increase if price pressures persist, potentially further impacting discretionary income.