Household spending power hits six-month low – supermarket

Household spending power has hit a six-month low as rising essential costs outstrip wage growth, according to supermarket figures.Although wages continued to rise, higher transport, housing and energy costs absorbed an even greater share of household incomes, leaving families with less money available to spend, according to Asda’s latest income tracker.Its figures suggest essential costs increased by 3.9% in August, outpacing year on year income growth of 3.8%.This left families with an average of £260 a week after paying bills and other essential costs, the grocer said.The tracker, which measures how much money households have left after paying taxes and essential bills, showed spending power growth slowed to 3.4% last month – the weakest level since March.Lower-income households’ spending power fell by 1.9% over the past year, leaving them with an average weekly shortfall of £75 between what they earn and what they spend on essentials, the figures show.Asda said household budgets were likely to remain under strain in the months ahead with inflation rising to a five-month high of 3.1% and the Bank of England signalling that interest rates could rise again if price pressures persist.Pushpin Singh, managing economist at Cebr, which produces the tracker, said: “Growth in the Asda Income Tracker slowed further in August to 3.4%, its weakest pace since March. While earnings growth has picked up slightly, it was outpaced by a considerable acceleration in inflation.“Inflation remains the primary risk to household spending power. Rising essential costs and the prospect of higher interest rates could place further pressure on discretionary incomes in the months ahead.”