The cost of the UK’s basket of essential goods rose 4,2% year-on-year in January, marking the fastest rise since March 2024. According to Asda’s Income Tracker, compiled by the CEBR, inflation rose to 3%, driven by rising prices for transport, food and soft drinks.
Despite this, the average household disposable income has reached £254 a week, an increase of £25,74 a year. However, income growth has slowed to 5,2%, putting further pressure on household budgets. Low-income households, which make up 20% of the total, are the hardest hit, recording a deficit of £69 a week. Young workers, on lower wages, are also significantly impacted.
Inflation will remain above target through 2025, with the rising energy price cap helping to keep costs high. “Inflation hit 3,0% in January, with food and transportation having a major impact,” said Sam Miley, an economist at CEBR. “However, incomes are rising faster than prices, and this trend is expected to continue into 2025.”
