Spending power is forecast to grow in the coming months. Credit: Dean Clarke via Shutterstock.

There are positive signs for the UK economy as Asda’s Income Tracker revealed an increase in household disposable income.

This follows a challenging period marked by high inflation and a cost-of-living crisis.

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The latest figures show a particularly welcome development for low-income households.

For the first time in more than two years (since August 2021), their disposable income has seen growth, rising by 4.9% in February 2024 compared to the previous year.

This improvement is attributed to a combination of factors, including continued increases in gross income and a significant slowdown in inflation.

However, despite this positive trend, the data highlights that low-income families are still struggling.

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Their disposable income remains negative at -£68 (-$85.96) per week, indicating their take-home pay isn’t sufficient to cover essential bills and living expenses.

The picture is brighter for the average UK household.

Disposable income for this group has grown for 11 consecutive months, reaching £231 per week in February 2024.

This represents an increase of £18.56 per week year-on-year, marking the strongest annual growth since August 2021 (with the exception of October 2023).

Looking ahead, upcoming policy changes are expected to further improve household finances.

These include reductions in National Insurance contributions, increases in pension payments, and an uplift to the National Living Wage.

This is anticipated to boost spending power in the coming months.

Despite the positive trajectory, disposable income for the average UK household remains 6.2% lower than pre-pandemic levels. However, the sustained growth observed in the Income Tracker since April 2023 suggests a steady path towards recovery.

Asda, a leading supermarket chain in the UK, is actively involved in initiatives to support families and communities.

It recently announced a pay rise for its store-based colleagues, following a ballot by union members.