Brits discretionary income is at its best since 2009, as falling fuel prices and cheaper utility bills gave families across the UK an extra £15 a week last month, compared to a year earlier.
Finding’s from Asda’s latest monthly income tracker highlight an increase in January’s miscellaneous spending, with Brits’ disposable income the biggest it’s been since Asda’s first tracker in January 2009.
This means the nation had £185 a week to spend on luxuries including holidays, cinema and theatre tickets, dining out, toys and games last month, up almost 10% from £169.40 in the same period in 2014.
The cost of filling up the tank and stocking up on groceries fell year-on-year by 16.2% and 2.5% respectively in January and led to the lowest levels of consumer price inflation seen since the 1960s. Essential item inflation went into negative territory, or “deflation”, for the first time in six years, falling 0.1%, today £1 will buy you more than it would have at this time last year.
Household energy prices also fell in January, dropping by 2% compared to a year ago, as energy firms followed in the footsteps of petrol stations and began passing on the benefits of falling oil prices to customers – a trend that will continue.
With gross household incomes growing 2.6% year on year, Brits are not only earning more money than they were this time last year, but incomes are stretching further as the price of goods stay the same or fall.
The economy is picking up: businesses are beginning to open their doors and look for new hires. As a result, the UK is benefiting from record levels of unemployment, not seen since July 2008. The unemployment rate fell to 5.7% in the three months to December 2014, down 1.5 percentage points on the same period in 2013, which means an extra 600,000 people are now in work.
Sam Alderson, an Economist at CEBR, comments:
“With wages rising and inflation likely to remain subdued for much of the year, households are expected to provide a key driver of growth for the UK economy in 2015. However, buying habits have evolved in the tough years following the financial crisis and, until households truly feel confident in the sustainability of their own economic recovery, shoppers will continue to try to squeeze more value out of their spending.”