UK households saw financial pressures ease 'slightly' in July as disposable income increased 4.5% year on year – the strongest annual growth rate since September 2021, according to latest data from Asda's Income Tracker.
Compared to June, British households saw disposable income up by £6.09 (€7.11) per week, taking the average disposable income to £218 (€255) per week, the highest since March 2022.
On a year-on-year basis, households had £9.48 (€11.07) a week more after paying taxes and essential bills, data showed.
This improvement in household spending power was driven by the easing of inflation to 6.8% in July, from 7.9% in the previous month.
The slowdown was predominantly due to lower energy prices and lower food and non-alcoholic beverage prices.
However, family disposable income remained below the levels experienced prior to the cost-of-living crisis.
Currently, family disposable income is down by £25.99 (€30.36) per week for the average household compared to July 2021, the report found.
The expenditure of households within the 30 to 49 age group saw the highest increase, as spending on essentials, such as food, housing costs and utility bills was 9.4% higher in July compared to a year earlier.
On average, these households spent £726 (€848) on essentials per week in July – £135 (€158) more than the average expenditure on essentials for all households, data showed.
Households aged over 65 saw a 7.8% year-on-year increase in average disposable incomes in July, reflecting gross income growth following the recent increase in state pension and smaller rises in the cost of essentials.
Asda added that it has extended its kids eat for £1 cafes offer until the end of the year. It has served over two million meals to kids since it launched the initiative last June.