Britons cut back on shopping in the final three months of the year, according to new figures that suggest all regions of the UK are facing similar pressures on the cost of living.
Asda’s latest income tracker recorded a drop in household income levels throughout the country in the fourth quarter of last year in a fifth consecutive quarter of annual decline. Disposable income, a measure of spending power after essentials such as food, taxes and bills are paid for, fell by 11.4 per cent during the fourth quarter to an average of £209 a week, compared with £236 a week over the same period in 2021.
Britain has been in grip of double-digit inflation since September, with price growth sticking above 10 per cent in December, a period comparable only to the runaway inflation of the early 1980s.
People are having to pay far higher electricity bills after the prices of gas and oil surged because of the war in Ukraine. The prices of food, transport and services also have contributed to higher inflation in recent months.
Asda’s tracker found that the South East, one of the nine statistical regions of England and an area with higher prosperity rates than the rest of the UK, suffered the biggest weekly fall in disposable income, of £44 to £186, in the fourth quarter, down by 24 per cent year-on-year. Consumers in Northern Ireland saw disposable income levels drop to a seven-year low of £93 a week, a 28 per cent decline.
“Annual declines in the income tracker have been witnessed across all regions, reflecting the geographically indiscriminate nature of living cost pressures,” Asda said. “Scotland has shown the most resilience of any region, though discretionary incomes there are still down by more than £23 per week year-on-year.”
Consumer spending was better than expected in the run-up to the Christmas period, but it is still far below pre-pandemic levels. Alongside higher energy bills, people are facing the highest tax burden since the 1950s in the coming years.
The chancellor is under pressure to alleviate spending pressure by slashing fuel duty for motorists in the spring statement in March. Jeremy Hunt could have as much as £10 billion in fiscal room for giveaways after an unexpected drop in global gas prices since December.
Drop in disposable income is affecting everybody in UK