Nearly six in ten UK households feel their weekly salaries don’t stretch as far as they did a year ago, the latest figures from Asda’s income tracker have found.
Growth in the supermarket’s income tracker slowed sharply in December, leaving the average UK household with £256 a week in discretionary income.
The deceleration brings a halt to the progress made over the previous three months, with the lowest-income households hit the hardest.
The lowest 20% of earners saw their spending power fall by 5% year on year, leaving them with a £73 shortfall and unable to cover essential bills and everyday spending.
Middle-earning households, typically earning between £25,000 and £41,000 per year and representing 40% of UK households, are also now worse off after modest growth in November, according to the retailer.
Spending power for households earning around £25,000 a year has since fallen by 7.1% compared to the same period last year, leaving them with £12 a week to spend after essential costs.
The outlook for households going into the new year reflects weakening earnings growth alongside a pause in disinflation, with annual inflation rising to 3.4% in December.
Related Story
Housing and utilities remained the largest contributor at 4.9%, while food and non-alcoholic beverages rose to 4.5%, driven by bread and cereals.
Cebr head of forecasting and thought leadership Sam Miley said: “Overall, 2025 has been a mixed year for the income tracker.
“Low inflation and strong earnings growth saw nominal discretionary incomes rise to record highs at the start of the year, before increases to employment taxes and wage floors in April increased cost pressure on businesses.
“This caused stronger inflation and weaker labour market conditions, prompting growth in the income tracker to stagnate.”
He continued: “While Q4 has shown signs of recovery for household purchasing power, this has largely been down to a slowdown in underlying price pressures, rather than an acceleration in earnings growth.
“Looking ahead, despite an uptick in inflation in December, Cebr expects this trend to continue over the first half of 2026.”
Click here to sign up to Retail Gazette‘s free daily email newsletter
