Food inflation is beginning to affect middle-income families, according to Asda’s latest Income Tracker.
The results show disposable income for families in the bracket fell for the first time since September 2023, amid a sharp rise in inflation.
Earlier, the BRC reported the cost of food rose at the fastest rate in almost 18 months, with prices up 4.2% in July, up from 4% in June and the fastest rate since February last year.
Asda said its figures showed the cost of essentials including food, drink and transport had risen by 5.1% year on year, putting further pressure on household budgets.
Middle-income households (with approximately £41,000 gross annual earnings) saw disposable income decline by 1.6% in July, the first drop in almost two years.
Lower-income households experienced an 11.1% drop in spending power – resulting in a shortfall of £73 per month between earnings and essential spending.
It said while higher-income households remained more insulated – with income growth still outpacing rising costs – the gap was narrowing.
Sam Miley, head of forecasting and thought leadership at Cebr, which collates the tracker, said: “Inflation accelerated to 3.8% in July, the highest rate since January last year. The rise was driven primarily by sharp price increases in essentials, such as food and non-alcoholic beverages.
“This has been reflected in the Income Tracker, which showed only modest growth of 2.4% in the year to July. While wages are expected to rise over the remainder of the year, persistently high inflation will put continued pressure on purchasing power, weighing on further gains in the tracker.”
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