Spending power of NI families falls below £100 for the first time since 2017

The discretionary spending power of the average Northern Ireland family dropped below £100, for the first time since 2017, to £93.50 per week in the second quarter of 2022, which is 32.3% (almost £45 per week) less than the same period a year ago and £110 below the UK average of £204.

The figures are revealed in Asda’s latest Income Tracker report (June 2022) which is independently compiled by Cebr.

The 32.3% drop is the largest contraction in spending power of any region across the UK, and the biggest drop in the history of the Income Tracker.

The latest Northern Ireland figures reflect the overall UK trend, with household disposable incomes falling for the eighth consecutive month, by 18% in June, compared to the same period last year.

Soaring living costs, up 11% year-on-year in June, meant that UK families were on average £43.95 a week or £188.34 per month worse off compared to June 2021.

As the UK’s worst performing region, it means the average family in Northern Ireland has only £93.50 per week at its disposal once all taxes, essential items and bills have been paid - £33.50 less than in Q1 2022.

These record falls in household spending power are being driven by income growth falling well short of spiralling inflation.

Northern Ireland is also disproportionately affected by having a high share of public sector workers, where wage growth has lagged in recent months, as well as a larger share of social security claimants, meaning the withdrawal of the Universal Credit uplift has had a significant impact.

When it comes to comparing spending power, the North East is the closest region to NI at £123 per week in Q2, contrasting sharply with Wales at £164 and Scotland at £205, while families living in London have £249.88 per week at their disposal – the first time discretionary income has fallen below £250 in London since the fourth quarter of 2018.

On a UK-wide level, the cost-of-living crisis hits particularly hard for low-income families with all of the bottom 20% of UK households having ‘negative disposable income’ – resulting in a shortfall of £60 per week in June between what they earned and what they needed to spend on essentials such as mortgage, rent, utility bills and transport costs. Increasingly, those in the bottom 40% of households are also seeing negative discretionary income.

Asda continues to deliver a range of measures to support customers and colleagues with the cost-of-living crisis, including the launch of a new ‘Essential Living Hub’, an online space where customers can access a broad range of hints, tips and hacks which go beyond the weekly food shop, covering how to save energy, budget better, buy and cook smarter, entertain the kids for free and even eat out without paying a penny.

For those visiting stores, Asda has also extended its £1 kids’ café meals, with no minimum adult spend, until the end of the year and ‘dropped and locked’ the price of over 100 family favourites until the end of the year. On average, prices will reduce by 12%.

Commenting on the latest report and the longer-term outlook for Northern Ireland, Sam Miley, senior economist at Cebr, said: “The latest Income Tracker report shows stark results for Northern Ireland, with the average household in the country witnessing discretionary income of just £93.50 per week in Q2.

“The impact of the cost-of-living crisis is clear, with rising prices eating into incomes and reducing families’ ability to spend.

“Indeed, Q2 marked the first time in five years that Northern Irish households have had less than £100 per week to spend on non-essential items. The worst could be yet to come, as an even more severe inflationary spike, driven by food and transport prices, is forecasted for Q4. This would put further downward pressure on spending power.”