UK households are prioritising savings over spending with disposable increasing 14% year on year in the second quarter and consumption down 0.3%, according to the latest data from Asda’s Income Tracker.
Disposable income levels reached the highs seen before the cost-of-living crisis, data showed.
In July, disposable income grew to £245 (€287.5) per week – the highest since March 2021.
Sam Miley, managing economist and forecasting lead at Cebr, said, “While household spending power has continued to grow, consumption has reduced within the same timeframe.
“This reflects the trend of households spending less and instead diverting more of their disposable income towards savings. Earnings growth continues to outpace inflation, so further improvements in discretionary income are expected across all age groups and other demographics.”
Other Findings
While all age groups are expected to witness further improvements in spending power as a result of income growth continuing to outpace inflation, some groups are more insulated from volatility than others, the study noted.
Households above 65 recorded the strongest growth in July with their disposable income reaching above the UK average.
Unlike households with people in the working age group, older households are less likely to be exposed to the impact of the volatile job market on disposable income and benefit from their state pensions being locked.
Elsewhere, British retail sales recovered in July with department stores and sports equipment stores boosted by summer discounts and sporting events, such as the UEFA Euro 2024, Wimbledon and the Olympics.
Retail sales volumes in the UK increased by 0.5% in July 2024, following a decline of 0.9% in wet and cold June, according to the Office for National Statistics (ONS).
