DISPOSABLE incomes for households are still declining, despite recent growth in the economy, and now stand £1 per week lower than they did in July last year.
According to Asda’s income tracker, the average household had £160 per week of disposable income last month, in comparison to £161 in July 2012, and £165 at the peak level in July three years ago.
Asda drew attention to modest wage growth and the effect of the one per cent increase cap on working-age benefits to explain the drop.
In the same period essential items rose in price by 2.9 per cent, and the cost of energy bills soared even higher, increasing by 8.2 per cent over the 12-month period.
Without the hike in the threshold for income tax, which moved from £8,105 to £9,440 in April, Asda estimate that incomes would have taken an even larger knock, falling by as much as £5 per week.
Remarking on the supermarket’s findings, Rob Harbron of the Centre for Economics and Business Research said: “Growth appears to be picking up in the UK economy, but concerns remain on how sustainable this will be.” He added: “With earnings growth remaining very weak, rapid increases in the cost of living continue to erode family spending power.”