According to recent figures, UK households saw a glimmer of economic recovery in April. After paying taxes and essential bills, households had 37p more per week to spend on themselves compared to the same period last year – marking an end to seventeen consecutive months of annual contractions. This positive news is further supported by new data which shows that inflation fell below 10% for the first time since August 2022, slowing to 8.7% in April.
However, despite these encouraging trends, it’s important to note that the cost of living crisis is far from over. The easing of inflation and the return to annual growth don’t necessarily suggest that household disposable income has improved, which continued to fall from £210 per week in March to £207 per week in April. Inflation in key categories such as energy and food has been driving this decline.
On a more positive note, the tracker highlights that all age groups have seen their annual gross income increase in April – particularly those aged 75 or over, who experienced a significant rise of 7.3% due to the recent uplift to the state pension. For all working age households, the National Living Wage has contributed to growth.
That being said, younger households have experienced the most significant decline in disposable income. Those aged 30 to 49 saw a 3.4% drop. But there is reason to believe that this will change once inflation subsides.
To sum up, the UK economy is showing signs of improvement, but it’s too soon to say whether this is a sustainable trend. If inflation remains under control, we may see positive changes in household disposable income.
