1. Asda Income Tracker Report: January 2017 Released: February 2017
M a k i n g B u s i n e s s S e n s e
Centre for Economics and
Business Research ltd
Unit 1, 4 Bath Street, London
EC1V 9DX t w
Report: January 2017
Released: February 2017

2. Family spending power was up by £7 a week year on year
Headlines – Asda Income Tracker
Headlines
The average UK household had £205 a week of discretionary income in January 2017, up by £7 a week on the same month a year before.
On an annual level, prices continue to rise, pushing up the cost of essential spending for households. Families who rely on their car to get around feel the increase in fuel prices. Also, the fares for train tickets have increased compared to last year. Compared to last month the increase in prices was less severe, leading to a decrease in the pound term figure for average cost of essential spending.
After what seemed like a pick up in wage growth towards the end of the year, the latest data from the ONS show that earnings growth fell back in the fourth quarter of As a result, households’ incomes continue to rise only modestly, while rising inflation is starting to eat into families’ budgets. This trend is projected to continue in the coming months leading to a further slowdown in spending power growth.
Family spending power was up by £7 a week year on year
in December
(a 3.5% annual increase)
Total household
income
£760 per week
Essential
Spending
£435 per
week - -
Taxes
£120 per
week
Average family
spending power
£205 per week = 2

3. Change to previous period
Asda Income Tracker Dashboard: February
Dashboard
Indicator
Year-on-year change
Change to previous period
+2.2%
GDP (Q4 2016)
+0.6% QoQ
Regular earnings growth* (Oct-Dec)
+2.6%
-0.1 p.p.
Unemployment rate (Oct-Dec): 4.8%
-0.3 p.p.
+/- 0.0 p.p.
Inflation (Jan)
+0.2 p.p
+1.8%
Net income (Jan)
+2.3%
+0.2% MoM
Essential item inflation (Dec)
+1.2%
-0.5% MoM
Family spending power (Dec)
+3.5%
+1.6% MoM
Food & non-alcoholic drinks
-0.5%
+0.2% MoM
Home electricity, gas & fuel
-0.8%
+/- 0.0 p.p.
Vehicle fuels
+16.8%
+3.4% MoM
KEY
IMPROVING TREND
NO SIGNIFICANT CHANGE IN TREND
DETERIORATING TREND
* three-month average, excl bonuses 3

4. Household spending power squeezed by rise in cost of essential spending
Income Tracker Trends
The Asda Income Tracker was £7 a week higher in January 2017 than a year before
Year-on-year change in Asda income tracker, £
Average household spending power was 3.5% higher in January 2017 compared with the same month last year.
In pound terms, the Income Tracker stood around £7 higher than in January As the graph shows, growth has slowed notably compared to the first half of 2016 and 2015 when the income tracker showed double-digit gains in pound terms.
Household spending power continues to be squeezed from two sides. Firstly, the cost of essential spending has risen further.
Wage growth, on the other hand, remains lacklustre despite the low rate of unemployment. The latest labour market data actually show that wage growth across the fourth quarter of 2016 actually slowed compared to the three-month period ending in November. 4

5. Higher prices for transportation and restaurant & hotels boost inflation
Cost of living
The main factors affecting family costs in January were:
Inflation of selected goods, annual rate (LHS) and contribution to headline inflation (RHS)
In January, inflation continued on its upward trajectory. The headline consumer price index rose by 1.8% on the year, mainly driven by higher transportation costs, which contributed 0.9 percentage points to inflation.
Food and non-alcoholic drinks weighed on inflation once more in December, although the impact on overall inflation was small at percentage points.
Rising prices for restaurant meals and stays in hotels contributed close to 0.4 percentage points to headline inflation in January.
As for utilities, gas had a slightly negative contribution to inflation with percentage points, while the price movement in electricity was not enough to move the headline indicator.
Vehicle fuel is a sub-category of Transport; Gas and electricity are sub-categories of Housing & utilities Mortgage interest payments are not considered in the calculation of CPI inflation 5

6. Consumer credit growth accelerates.
Hot Topic
Report Spotlight:
Consumer credit growth accelerates.
What happened?
Lending outstanding*, per household, £
Growth in unsecured consumer credit accelerated strongly at the end of 2016, standing at its highest level over the past decade.
According to the Bank of England, the total stock of unsecured consumer debt stood at £193bn at the end of 2016.
How does it affect family spending power?
The continued strong rise in household debt suggests that consumers still make use of relatively low interest rates and defy the rather gloomy outlook for the coming months.
While this is good news for the UK economy, the Bank of England warned that further increases in household debt levels could undermine financial stability, e.g. if a larger number of borrowers default on their debt. Governor Mark Carney said the Bank would take measures to prevent this if necessary
Increasing debt levels and a falling savings ratio mean that households have less of a buffer should they fall on hard times. With an expected economic slowdown around the corner, some might regret purchases made on finance in the past.
*excluding student loans 6

7. Contact
Appendix
Please find attached method notes and the tabulated date. Asda produces a monthly income tracker report with a more comprehensive report every quarter. For press enquiries please contact: Jack Woodhead, Asda Senior Press Officer, ;
For data enquiries please contact:
Kay Neufeld, Cebr Economist, ; 7

8. Appendix

9. Wage growth dips in the three months to December despite low unemployment
Asda Income Tracker tables
Annual percentage change in Consumer Price Index, essential item inflation and average weekly earnings
2.6%
1.8%

10. Inflation trends over time
Asda Income Tracker tables

11. Monthly Asda Income Tracker
Asda Income Tracker tables
Figure 1: Asda Income Tracker and year-on-year change (excluding bonuses)
Asda Income Tracker (LHS)
Asda Income Tracker annual % change (RHS) 11

12. Monthly Asda Income Tracker
Asda Income Tracker tables
Table 1: Average UK household Income Tracker, £ per week, current prices, excluding bonuses
Month
Income tracker
Month
Income tracker
Month
Income tracker
Month
Income tracker
Month
Income tracker
January 2013
£166
January 2014
£170
January 2015
£185
January 2016
£198
January 2017
£205
February 2013
£163
February 2014
£169
February 2015
February 2016
March 2013
£162
March 2014
£168
March 2015
£186
March 2016
April 2013
£167
April 2014
April 2015
£188
April 2016
£201
May 2013
May 2014
£171
May 2015
May 2016
£202
June 2013
June 2014
June 2015
£189
June 2016
July 2013
July 2014
£173
July 2015
£191
July 2016
August 2013
August 2014
August 2015
August 2016
£203
September 2013
September 2014
£174
September 2015
£192
September 2016
October 2013
October 2014
£176
October 2015
£193
October 2016
£204
November 2013
November 2014
£179
November 2015
November 2016
December 2013
£165
December 2014
£181
December 2015
December 2016
2013 Average
2014 Average
2015 Average
£190
2016 Average 12

13. Method notes Total household income minus taxes equals net income
The Asda income tracker is calculated from the following equations:
Total household income minus taxes equals net income
Net income minus basic spend equals Asda income tracker
Total household income for the United Kingdom is derived from the Living Costs and Food Survey 2012 (released December 2013). This is updated on a monthly basis using official statistics on average earnings, unemployment, social security payments, interest rates and pension income. Earnings data from the Office for National Statistics that is released in the month of the report refers to the previous month. We forecast earnings data for the month of the report. Taxes are subtracted from total household income to estimate the actual amount that can be spent on goods and services, i.e. net income or disposable income. The average amount of tax paid is calculated using the latest version of the Living Costs and Food Survey. This is updated on a monthly basis using Office for National Statistics data and Cebr modelling. 13

14. Method notes
Method notes
These components are based on official statistics and Cebr calculations.
Net income is calculated by deducting our tax estimate from our total household income estimate. Basic spend (cost of living) figures are updated using monthly consumer price data and the trend growth rate in the volume of essential goods and services purchased over the most recent ten year period. A full list of items constituting basic (or ‘essential’) spending was created in collaboration between Asda and Cebr when the income tracker concept was originally formed in This list is available on request. The Asda income tracker is a measure of ‘discretionary income’, reflecting the amount remaining after the average UK household has had taxes subtracted from their income and bought essential items such as: groceries, electricity, gas, transport costs and mortgage interest payments or rent. The income tracker measures the amount left over to spend on discretionary purchases such as leisure and recreation goods and services. 14

15. Disclaimer
Disclaimer
This report was produced by the Centre for Economics and Business Research (Cebr), an independent economics and business research consultancy established in 1993 providing forecasts and advice to City institutions, government departments, local authorities and numerous blue-chip companies throughout Europe. The main contributors to this report are Cebr economists Kay Neufeld and Scott Corfe. Whilst every effort has been made to ensure the accuracy of the material in this report, the authors and Cebr will not be liable for any loss or damages incurred through the use of this report. London, February 2017 15