Two in five households saw their spending power fall last month as inflation hit its highest rate in 18 months, according to Asda’s latest income tracker.
Inflation unexpectedly jumped to 3.6% in June as rising petrol and food prices pushed up household bills.
It means the poorest households have now seen their spending power drop by 8% over the past year as income growth fails to keep pace with the rising costs of necessities, Asda said.
This leaves them with a weekly shortfall of £74 between what they earn and what they need to cover essential bills and everyday costs.
“Inflation surprised to the upside in June, putting further downward pressure on the rate of growth in the income tracker,” said Sam Miley, head of forecasting and thought leadership at Cebr.
“The concentration of inflation in essential categories, including food, transport, and utilities, is placing households under particular strain. Nevertheless, earnings growth remains robust and is offsetting price pressures for now.”
The impact is hitting hardest in Northern Ireland, which has the lowest disposable income figure of £129 per week, compared with the UK average of £250.
By contrast, spending power in London (£326), Scotland (£261) and the East of England (£267) remains strong with higher wages and stronger job markets helping to protect households from rising prices.
Food price inflation has increased for three consecutive months and is now at its highest annual rate since February last year. However, it remains well below the peak seen in early 2023.
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