Despite slowing inflation in the UK, households continue to face pressure on purchasing power. This is according to the latest Asda Income Tracker, which shows that inflation stood at 2,8% in April, the lowest level in thirteen months, but this hasn't translated into real relief for many households.
The report highlights that, for the third consecutive month, the cost of essential goods has grown faster than wages, eroding the spending power especially of working families between the ages of 30 and 49, considered the most economically active segment of the country.
Energy and fuel prices continue to weigh heavily on household budgets, still impacted by international geopolitical tensions and the conflict in Iran. Fuel inflation jumped from 4,9% in March to 23% in April, while heating oil prices are 129,6% higher than in the same period last year.
The situation appears particularly dire for low-income groups. According to the tracker, households with the lowest earnings are experiencing an average deficit of £75 per week, while the gap in spending power between the richest and poorest families has widened by approximately £18,75 per week over the past year.
The greatest difficulties also affect young people. Those under 30 allocate 68,2% of their income to essential expenses, the highest percentage of any age group, partly due to rising rents.
Families aged 30 to 49, despite having the highest average gross income – around £1.412 a week – also have the highest expenses: £817 on essential goods and services and another £291 in tax.
Against this backdrop, Asda has announced new marketing initiatives to strengthen its position in the convenience sector. With its "Take a Fresh Look" campaign, the British chain has launched a review of its in-store offerings, introducing price cuts on hundreds of consumer products, including minced meat, sausages, eggs, and canned beans.
The brand also claims to maintain lower prices than its main British competitors such as Tesco, Sainsbury's and Morrisons on thousands of items.
“Many families continue to feel more financially challenged than they did six months ago,” explained an Asda spokesperson, underlining how the brand’s aim is to offer lower prices and greater choice in the segments most purchased by consumers.
Sam Miley, head of Forecasting and Thought Leadership at CEBR, also believes the slowdown in inflation is a positive but still insufficient sign. "Consumers benefited from the reduction in the energy price cap for the second quarter, but inflationary pressures related to the energy crisis remain high and could intensify again in the coming months," the analyst noted.
