Living costs outpacing wage growth in much of the UK: Asda
The latest Asda Income Tracker reveals that many UK households are under financial pressure, with rising living costs outpacing wage growth across much of the country.
In September, the average UK household had £254 in weekly discretionary income, up £2.81 year-on-year, marking the first acceleration in growth since December 2024.
However, with inflation remaining stubbornly high at 3.8% – the joint-highest level since January 2024 – the financial burden facing lower-and middle-income families shows little sign of easing.
Data from the supermarket group shows:
- 60% of lower- to middle-income households saw a decline in discretionary income, as essential spending continues to rise faster than post-tax income.
- The lowest-income households recorded a shortfall of £73 per week, leaving many struggling to cover basic costs.
- Seven out of twelve UK regions were worse off than a year ago, with the West Midlands seeing the sharpest drop in weekly discretionary income (down £7.70 to £193).
London recorded the highest regional spending power at £334 per week, while Northern Ireland had the lowest at £130.
Annual gross income growth slowed across nearly all UK regions, with manufacturing hubs such as the West Midlands, Yorkshire and the Humber, and the North West particularly affected by US export tariffs.
“While inflation has held at nearly twice the Bank of England’s target, certain essential spending categories such as food are starting to see a slowdown in price rises, which will be welcomed by consumers,” said Sam Miley, Head of Forecasting and Thought Leadership at Cebr.
“The upcoming November Budget has also hinted at further support for household energy bills, which could be an additional cause for optimism heading into the fourth quarter of 2025. That said, with the UK labour market cooling, the risk of a contraction heading into the new year cannot be ignored.”
The news comes as Chancellor Rachel Reeves refuses to rule out tax increases in her November Budget.
“I will only set out the individual policies of the budget until the 26th of November. That’s not what today is about. Today is about setting the context up for that budget,” she said in a presentation on Tuesday (4 November).
“Viewers can see the challenges that we face, the challenges that are on a global nature. And they can also see the challenges in the long-term performance of our economy. And the Office for Budget Responsibility will set all that out. They’ve done the review of the supply side of the economy that looks at the past, but they use the past to predict the future.
“As Chancellor, I have to face the world as it is, not the world that I want it to be. And when challenges come our way, the only question is how to respond to them, not whether to respond or not.”
