Consumers’ spending power increased by £4 to £171 a week last month, marking the eight consecutive month that families have seen their discretionary incomes rise year on year, Asda’s Income Tracker shows.
The rise in the average UK household was partly down to a drop in food prices year on year - the first time since 2006 - helping family budgets and contributing to a sharp slowdown in the rate of annual inflation on essential items, which dropped to just 1.3% compared to 1.7% last month.
The cost of clothes and mortgage interest payments fell 0.1% and 0.6% respectively over the year.
The Tracker found that the cost of plane tickets fell 3.2% in time for the half term break in May. The figure was in contrast to the 22% increase in airfares in April and May 2013.
The labour market recorded its fastest rate of employment growth since 1989, with an extra 780,000 people in work compared to the same time last year. This helped lead to a fall in unemployment, which dropped to its lowest rate since late 2008 and now stands at just 6.6%.
However, wage growth slightly slowed to just 0.9% from a high of 1.4% earlier in 2014.
Asda president and chief executive Andy Clarke, said: “As the country sees discretionary income rise for the eighth consecutive month, my confidence continues to grow that there is a strong and sustained recovery happening in the UK.
“The rate of essential item inflation is still slowing thanks to a competitive market and family spending power is on the up. I’m interested to see if next month’s regional breakdown of the tracker will show if this continued growth is being felt in every region.”
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