Fall in household disposable income

The research - carried out on behalf of the company by the Centre for Economics and Business Research (Cebr) - revealed a record drop in average household disposable income of £43.95 a week - equivalent to £175.80 per month. In addition to this, 20% of UK households had a “negative disposable income” of £60 a week in June. 

Overall, household disposable income fell by 18% when compared to the same period last year, with the total household income coming to £890 a week. The total cost spent on essentials was worth £537 a week, while taxes set them back £152 - making the average family have a spending power of around £200 a week. 

The cost of living has driven these record falls in the income tracker, with income growth falling well short of inflation, which has continued to spiral. Cebr expects a slight deceleration of the inflation in the third quarter of 2022, however, meaning the income tracker has likely now hit its near-term trough - however further pressure is anticipated in the fourth quarter. 

With these pressures, the growth outlook for the UK economy has weakened significantly, raising the prospect of a recession this year. 

The research also investigated the UK-wide gross income growth in the second quarter of 2022. It found the annual growth in gross incomes slowed for a fourth consecutive quarter, reaching 2.8%. 

This is down on the near-term high of six percent seen in the second quarter of 2021, and marks the slowest rate of gross income growth since the third quarter of 2020. All regions saw a slower rate of gross income growth in the second quarter of 2022 when compared to the same quarter in 2021.

In addition to this, the quarterly Asda Income Tracker saw a third consecutive annual contraction in the second quarter of 2022. For the UK as a whole, it amounted to a 16.6% fall - the largest on record. 

A unanimous fall in discretionary income was seen across all UK regions and nations in relative terms, with these falls being largest in Northern Ireland and the north east - amounting to annual contractions of 32.3% and 27.4% respectively. 

Among other factors, these regions are more likely to be impacted by the effect of the Universal Credit withdrawal due to having a disproportionate number of social security claimants. 

When it comes to discretionary income, London has joined other regions in witnessing failing household spending power after being the only region to record annual discretionary income growth in the first quarter of 2022. This highlights how the cost-of-living crisis is impacting households across the board, including those in the wealthiest regions.