The average weekly disposable income climbed to £198 per UK household in March according to Asda’s latest income tracker.
Families were £12 better off year-on-year. This means that annual growth in spending power has remained above £10 for 17 consecutive months.
London saw spending power rise slightly, up £14 on the same period last year. However, the percentage increase of 5.5 per cent sees its rate of growth remain below the UK average of 6.3 per cent.
An Asda spokesperson said: "The sustained rise in discretionary income gives family finances a welcome boost ahead of the summer months. The outlook remains cautiously positive, despite a slowdown in wage growth across the country as a whole."
Notable drops were seen in the cost of vehicle fuel, down 9.2 per cent in a year. Electricity and gas were also cheaper. However, clothing and footwear are more expensive, as is dining out.
"While assembly elections and the upcoming referendum on EU membership provide an uncertain background for consumers, the low levels of essential item inflation and growing discretionary incomes should continue to provide support to both consumer spending and overall economic growth," said Sam Alderson, an economist at the Centre for Economics and Business Research.