Gloomy picture for consumer spending

Even though the data showed disposable income rose year on year, growth in the Income Tracker was only 1.7​ per cent​, the weakest annual growth rate since June 2014.​ Asda said families will see their spending power decrease over the ​coming months​ and lower-income households​ will be hit the hardest.​

The latest Asda Income Tracker revealed that in February, families had £202 of disposable income available per week.

Despite a positive monthly trend in year on year income growth, Asda’s pulse of the nation research suggests customers have a less positive outlook on the future of their disposable income.

The survey showed that 47 per cent said they believe their disposable income is likely to remain the same, 46 per cent said they think it will fall and only 6 per cent think that they will see an increase in spending power.

Kay Neufeld, economist at Cebr, said: “In February the rate of inflation exceeded the Bank of England’s target rate of 2 per cent for the first time in over three years.

“Over the next months, we expect the cost of living to increase further as the effect of the weak pound and higher oil prices continue to exert upwards pressure on inflation.

“In combination with falling wage growth, this means that families will actually see their spending power decrease over the next months.

“This will especially be felt by lower-income households, who spend a larger share of their budget on essentials such as food and clothing. As a glimpse of things to come, we’ve seen discretionary incomes decline for three out of fives households this month, the first time this has happened since June 2014.”

There was a significant spike in vehicle fuel prices year on year, which rose 19.1 per cent in February. This was due to a combination of currency movements and a spike in worldwide oil prices.

Besides higher prices for fuel and for transportation in general, an increase in housing and utility bills contributed to inflation in February.