Families in Wales hit hard as disposable income is squeezed by cost-of-living crisis
Families in Wales are being hit hard by the squeeze on household disposable incomes due to the cost-of-living crisis, according to a new analysis.
The latest figures from supermarket giant Asda’s Income Tracker show that disposable income fell by 3.7% on the year in the second quarter of 2023.
This is equivalent to a shortfall of £6 per week or £27 across the month.
Wales was amongst the worst performers in terms of spending power growth in the quarter, with only Northern Ireland and the South West of England seeing bigger percentage falls in discretionary income, at 4.0% each.
Wales’ weak performance is put down to poor gross income growth. Although gross incomes in Wales picked up at an historically elevated annual rate of 5.5% in Q2, this was the weakest improvement of any region.
The report suggests that in Wales and Scotland the composition of the labour market is likely to be dragging on gross income growth, with the public sector accounting for a larger share of jobs.
Both Wales and Northern Ireland are predicted to return to annual improvement in spending power in the next quarter of the year when inflation is projected to slow.
The decrease in disposable income mapped by the index has been particularly evident for low-earning families, with 40% of UK households in negative income territory last month – meaning their take home pay did not cover spending on bills and essentials.
Families in Northern Ireland, and the English North East and West Midlands struggled the most during Q2, with average weekly disposable incomes of £95, £133 and £163 respectively – well below the UK average of £208 across the quarter to 30 June.
Those regions faring worse than others during the cost-of-living crisis tend to be characterised by a greater concentration of spending on consumption categories that have seen high inflation recently.
They also have lower employment rates or a higher concentration of employment in low paid or low wage growth occupations than other parts of the UK.
In contrast, many families living in London are faring better with rising living costs and have seen disposable incomes rise by 5.8% year-on-year to an average of £272 per week during Q2. A key factor behind this rise is the strong labour market and concentration of high paying jobs in the capital.
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