Spending power of NI families drops to £97 per week (Asda’s Income Tracker)

• Household discretionary income in NI falls to the lowest level since 2015 at £97
• Northern Ireland and Wales saw the largest decline in weekly spending power with a decrease £4.60 and £5.90 (respectively) compared to the same quarter in 2016
• Consumer spending power has fallen for families in 75% of UK regions

The latest figures from Asda’s Income Tracker reveal low wage growth and the reliance of the Northern Ireland  economy on the public sector are negatively impacting family spending power, with discretionary income falling to £97 per week – the lowest level since Q4 2015.

The fall in family spending power in Northern Ireland is accelerating. Following a decrease of -0.8% YoY in the first quarter 2017, the latest figures show a decline in family spending power of 4.6% in Q2 2017 – equating to £4.60 per week – compared to the same quarter a year earlier.

Similarly, households across the UK as a whole, saw average weekly spending power decline for the third month in a row to £198.

With the summer holidays approaching, a slowdown in inflation was also welcomed by families across the UK.

Through its pulse of the nation survey, Asda found 40% of consumers are planning ’staycation’ holidays the UK this summer and lower fuel price will provide some respite on families’ budgets as the school holidays approach. Falling oil prices have eased the pressure on fuel prices over recent months with cheaper fuel being one of the main contributors to the falling inflation rate compared to May. Fuel is still showing inflation year on year, however it is now only 4.1% higher than it was in the same month last year.

Two categories that created additional pressure on household budgets were electricity, with a rate of inflation of 7.7% in June, and alcohol and tobacco, for which prices increased by 5.1% year-on-year.

The latest labour market data have revealed that the employment rate across the UK has risen to an all-time high of 74.9%, however wage growth has not yet followed this trend with very little movement each month. With inflation still higher than wage growth, the pressure continues to mount on families’ spending power.

London households remained ahead of the UK average with £266 of spending power per week, however they are still £1.20 worse off than the same period last year.

Families in the North East however bucked the trend and saw the greatest growth in the second quarter, a £3.80 gain year-on-year. Yorkshire and the Humber and the North West were the other two regions that saw positive growth for familys’ discretionary income year on year.

Unsurprisingly, with such a mixed outlook across the country, the latest insight from Asda’s pulse of the nation survey has shown that despite inflation easing in June, customers are still less optimistic about the economy. 46% of consumers believe that their disposable income will fall over the next month, whilst 78% think their day to day cost of living will increase.

Kay Neufeld, Economist, Cebr, said: “In June, the ASDA Income Tracker shows that family spending power has decreased for the third consecutive month. Although lower inflation in June eases the pressure on households’ budget somewhat, rising food prices continue to drive up the cost of essential spending.

“The comparison between Q2 2016 and Q2 2017 shows that the gains in spending power made over the second half of last year have been reversed. On a regional level, this reversal of fortunes for households was most pronounced in Northern Ireland and Wales due to higher unemployment and weaker wage growth compared to other regions.

“For families going on vacation in the UK, cheaper fuel prices will be a welcome factor holding costs down. But prices for hotels and restaurants have been on the rise for some time now and are likely to more than offset savings at the pump.”