According to Asda’s latest monthly Income Tracker, ‘household spending power’ is growing at some of the strongest rates recorded in the history of itsbarometer. Asda reported a significant £17 increase of average UK household discretionary incomes; from £170 to £187 of the same month, year on year.
Asda’s findings suggest that Brits can now invest their disposable incomes in what they want as well as what they need, ideal for the approaching summer break period. With further falls in the price of goods and services, essential item inflation has remained negative. This means that the typical household basket is costing less than in 2014. Those planning a ‘staycation’ this summer can also reap the benefits of the deflation of food and non-alcoholic drink prices that have dropped by 2.8% in comparison to the previous year.
Further results present the acceleration of consumer earnings by 2.2% since mid 2014 and 386,000 more people are employed than a year ago.
The supermarket giant’s Income Tracker suggests that overall “falling inflation which turned negative in April for the first time since 1960, remains the most significant factor behind rising spending power rates”.
Commenting on the findings, President and CEO of Asda, Andy Clarke, said: “During my 30 years in retail this is the first time I’ve seen essential item deflation and I know this will be welcomed by those stocking up their cupboards. What I’m seeing in my stores is a customer who’s better off financially than twelve months ago, but one who is still battle scarred and choosing to save rather than spend on those extra treats”.
Sam Alderson, Economist at the Centre for Economics and Business Research, added “Negative inflation is largely expected to be temporary. As such, the significant increases seen in household spending power should provide the economy with a major boost in 2015. In that sense deflation has helped rather than hindered the UK’s economic recovery.”