Households saw a ray of hope in their finances over the past year. After paying taxes and essential bills, households now have 37p more on their hands each week compared to last year. This positive trend marks a welcome relief for many after going through seventeen consecutive months of annual contractions. However, other data shows that the cost of living crisis is far from over.
Inflation has fallen below 10% for the first time since August 2022, dropping to 8.7% in April. Yet, despite this, the reduced inflation figures do not indicate that the cost of living crisis is over. In fact, household disposable incomes continue to fall as monthly disposable income drops from £210 in March to £207 in April. The inflation in critical categories like energy and food has been a major contributing factor to this decline in household income.
April’s figures demonstrate a positive change across all age groups. People aged 75 and above particularly saw a massive upturn in their average gross incomes at 7.3%. This upswing is due to the recent uplift in the state pension. Further changes in government policies, such as the National Living Wage, led to gross income growth for all working-age households.
It’s not all good news, however. Younger households, who tend to spend the most, continue to experience the most shortfall despite the general rise in income. The disposable income of those aged 30 to 49 has gone down by a significant 3.4%. Fortunately, this trend is expected to change when inflation subdues.
In conclusion, while there is some positive movement in the economy, it is crucial to recognize that the cost of living crisis continues to weigh on household incomes. Therefore, it is essential to monitor the situation closely and implement appropriate policies to help the most vulnerable households.
