Consumers are putting increased disposable incomes into savings rather than shopping, according to new research.
Average household disposable income in July increased by 11.7% to £245 per week – the highest level since the start of the cost of living crisis, according to the Asda/Cenrte for Economics and Business Research Income Tracker, reaching its pre-crisis high
UK households saved an average of £122 per week in Q2 2024, a 12.3% increase on 2023.
While all age groups are expected to witness further improvements in spending power as result of income growth continuing to outpace inflation, some groups are more insulated from volatility than others.
Households above 65 recorded the strongest disposable growth in July and their disposable income now sits above the UK average. Unlike working age households, older households are less likely to be exposed to the impact the job market has on disposable income, and benefit from their state pensions being locked.
‘While household spending power has continued to grow, consumption has reduced within the same timeframe. This reflects the trend of households spending less and instead diverting more of their disposable income towards savings. Earnings growth continues to outpace inflation, so further improvements in discretionary income are expected across all age groups and other demographics,’ says Sam Miley, CEBR managing economist and forecasting lead.