UK Households Struggle Amid Rising Costs and Negative Discretionary Income
- Disposable income reaches record low due to inflation
- 20% of households have negative discretionary income
- Low-income households see over 100% decline in disposable income
- Households changing spending habits due to inflation pressure
Household discretionary income has fallen by 17.2% in May, reaching £41.94 per week or £167.76 per month, marking the seventh consecutive month of decline. Asda’s Income Tracker reveals that 20% of households now have negative discretionary income, meaning their post-tax earnings do not cover essential spending. Inflation has led to a rise in household spending on necessities by 10.6% year-on-year, affecting items like fuel, groceries, energy bills, utilities, mortgages and rent. With taxes and essential costs deducted, the average household is left with £202 per week for discretionary spending. Low-income households have experienced a 100% drop in disposable income, resulting in a negative figure of £58. Asda notes that consumers are adjusting their behavior under this financial strain, with 44% opting for promotions and 39% switching to generic products.
Factuality Level: 8
Factuality Justification: The article provides accurate and objective information about the decline in household discretionary income, citing a reliable source (Asda’s Income Tracker) and discussing the reasons behind this decline. It also includes relevant data and statistics to support its claims. However, it could provide more context on the Universal Credit uplift and its withdrawal.
Noise Level: 2
Noise Justification: The article provides relevant and accurate information about the decline in household discretionary income and its causes, as well as how people are adjusting their spending habits. It also supports its claims with data from Asda’s Income Tracker.
Financial Relevance: Yes
Financial Markets Impacted: UK consumer spending and retail sector
Financial Rating Justification: The article discusses the decline in household discretionary income and its impact on essential spending, which can affect consumer behavior and spending patterns. This can have a ripple effect on the UK retail sector and overall economy.
Presence Of Extreme Event: No
Nature Of Extreme Event: Other
Impact Rating Of The Extreme Event: Minor
Extreme Rating Justification: There is no extreme event mentioned in the text. The article discusses a significant decrease in household discretionary income and rising costs of essential spending, but it does not qualify as an extreme event.
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