Asda’s latest Income Tracker has revealed that rising transport and fuel costs are driving up the cost of living. October saw the second consecutive month of single digit spending power growth, suggesting that UK families are seeing a slowing of the positive trend witnessed over the last two years.
Food prices, which contributed to £55.50 of costs per week, followed in third place. However, compared to 2015, the cost of food is £1.30 lower now than the £56.80 seen in October 2015.
Mortgage costs saw a significant percentage drop, with the lower bank rate helping interest payments decrease by 5.1 per cent from the same time last year.
Overall, spending power rose by less than five per cent in October compared with a year ago, with families having £202 discretionary income to spend a week. These figures replicate those seen in September, when annual disposable income growth dropped below £10 per week for the first time in nearly two years. Both consumer price inflation and essential item inflation eased slightly compared to the previous month, however both stand in positive territory at 0.9% and 0.3% respectively, contributing to the slowing growth of discretionary income.
Andrew Gwynne said:
“Disposable income is still growing year on year, which is encouraging, but there are clearly pressure points emerging that will start to impact families spending power if they continue.
“Transport costs are £120 per year more expensive than at the start of the year, the cost of living is rising and real wages simply aren’t reflecting this.
Insights highlight that unemployment has hit its lowest level in 11 years, with a record high of 74.5 per cent of 16-64 year olds in employment in the three months to September. However, the number of workers claiming unemployment benefits rose in October and wage growth remains stubbornly flat at 2.4 per cent.”
Kay Neufeld, Economist, Cebr, said:
“Discretionary incomes continue to grow significantly slower than earlier this year. While the overall increase in inflation paused in October, prices for certain items, such as vehicle fuel, have begun to rise sharply. Over the next few months, price increases are expected to become visible in other product categories.
“For the second month in a row, households’ weekly spending power has risen by less than £10 compared with a year ago. Moderate wage increases continue to support income growth but going forward, we expect wage growth to remain flat as first signs of a slowdown in the labour market become discernible.”