Household disposable income improves

The average household had a disposable income of £224 per week in the fourth quarter, the highest since the start of 2022, according to the Asda Income Tracker.

The increase in disposable income is attributed to wage growth and easing inflation. However, despite the improvement, disposable income is still down from before the pandemic.

After paying bills and essentials, the average UK family had a disposable income of £224 per week in Q4. This was the highest amount since the start of 2022 and was driven by strong wage growth and inflation continuing to ease.

Despite the positive improvements, disposable income remains firmly down on the values witnessed prior to the cost-of-living crisis. Compared to the peak of £246 in Q1 2021, UK-wide discretionary income has fallen by 9.1%.

London continues to have the strongest disposable income with the average household in the capital seeing an increase of 10.1% to £301 per week across Q4. This means that their disposable income is now near to the peak seen in 2021.

The East of England and Scotland also both recorded above UK-wide average disposable income values at £236 and £228 per week respectively.

Wales recorded the weakest increase in disposable income in the quarter, which was mainly driven by weak earnings growth in the region and whilst the North East witnessed the strongest growth at 11.3%, it still has the second lowest income value at £146 per week.

In contrast to London, Northern Ireland’s spending power however significantly lagged behind the UK average at just £103 per week. This can be attributed to weaker earnings growth and the country’s greater exposure to inflationary pressures.

Consequently, disposable income in Northern Ireland remains firmly below its peak before the cost-of-living crisis. This difference is the highest amongst all regions of the UK.