UK families were £7 a week better off in May according to Asda’s income tracker.
Asda said a typical household had £164 a week of discretionary income in May, a 4.8% increase on the same time last year.
“News that consumers are benefiting from cuts in mortgage payments is certainly reassuring and although we’re better off year on year, this by no means signals the end of difficult times for our customers.”
Andy Bond, president and chief executive, Asda
Spending power was boosted in part by cuts in interest rates, which reduced mortgage payments for many. Mortgage interest payments were 45% lower than the previous year levels.
Discretionary income was also been boosted by lower costs of transport and electricity, compared to a year earlier.
Asda president and chief executive Andy Bond said: “News that consumers are benefiting from cuts in mortgage payments is certainly reassuring and although we’re better off year on year, this by no means signals the end of difficult times for our customers. Many of our customers are still worried about the uncertainties surrounding job security as there is no real sign of an up-turn in the labour market.”
“Spending power is set to rise further in the coming months as inflation continues to fall. That’s why it’s our job as retailers to try and stimulate customer spending by keeping prices low.”
Charles Davis, economist at Cebr, added: “Spending power has increased relative to a year earlier in both April and May. However, this is not necessarily translating into increased spending on the high street – as shown by the 0.6 per cent month on month fall in retail sales in May. This is due to increased levels of precautionary saving as consumer debt levels remain high, unemployment rises and households see an uncertain economic climate ahead.”