Research by the Centre for Business and Economics Research (CEBR) and Asda has revealed that wealthy households in the UK were the only group to see a rise in living standards this year, while poorer families are being pounded by soaring energy and food bills.
The decrease in disposable income has been particularly stark for low-earning families, with 40% of UK households falling into negative income territory in May – meaning their take home pay does not cover spending on bills and essentials. The average shortfall for these households was £42.50 per week in May.
In contrast, high-income households enjoyed a 2.1% rise in disposable income in May year-on-year to an average of £754 per week. This is the second successive month of disposable income growth for these households, driven by strong increases in their gross income.
The tracker showed that family disposable income as a whole rose by £1.85 per week in May to an average of £207 per week, a 0.9% increase compared to the same period last year.
However, even with this increase family finances remain weak, as May’s figure of £207 per week was the second lowest since October 2022. The strain on family disposable incomes is the result of elevated and persistent inflation in essential categories such as food and housing.