Asda’s latest Income Tracker has revealed households experienced a decline in spending last month as inflation climbed to its highest level in 15 months.
While the average household had £11.53 more to spend per week compared with the same time last year, rising living costs wiped out the difference. In real terms, households were worse off as a result, said the supermarket.
Household disposable income in real terms fell by £8.35 compared with the previous month, bringing it down to £249 per week in April.
Annual inflation, measured by the Consumer Prices Index (CPI), increased to 3.5% in April. The rise was largely driven by higher gas and electricity prices following last month’s increase in the Ofgem energy price cap.
Water and sewerage bills also recorded their sharpest rise since at least 1988, while the cost of foreign holidays contributed further to overall inflationary pressures.
Asda said the impact of rising inflation was even more pronounced on low-income households, as they spend a greater share of their income on essentials and have limited financial flexibility to absorb higher costs.
The findings come after the BRC earlier today reported food inflation at a a one-year high in May, as fresh foods like beef, milk, and eggs all grew more expensive.
Food prices rose 2.8% in May, it found, marking the fourth consecutive month of rising prices and the highest level since May last year.
Sam Miley, head of forecasting and thought leadership at Cebr, which collates the tracker for Asda, said: “Inflation jumped to 3.5% in April, its highest level since January last year. Given that the change in the rate of price growth was particularly stark across essential spending categories, such as energy and transport, households are experiencing growing pressure on their costs since the start of the year.
“The Income Tracker weakened as a result. Though this will be a blow to households, we expect there to be some improvement for much of the rest of the year, with earnings growth expected to outpace inflation.”
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