More than 60% of UK households saw their disposable incomes drop going into the New Year, according to Asda, despite its latest Income Tracker reaching a record high and “capping off a year of solid growth in spending power”.

For these households, income growth lagged behind annual inflation, despite it slowing to 2.5% in December. They also did not benefit from the strong pay growth in the current job market in the same way as others, the supermarket said.

The lowest-earning families, which make up 20% of all UK households, faced a shortfall of £70 per week in December 2024, with their take home pay still not enough to cover bills and essentials.

The average UK household had £251 per week remaining after covering bills and essential expenses last month – an increase of 12.1% compared to the previous year.

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Asda said this figure represents the highest disposable income figure recorded by its tracker, surpassing the pre-cost-of-living crisis peak of £247 per week in March 2021. It also noted that these improvements were largely driven by strong wage growth and a slowdown in inflation.

Cebr managing economist and forecasting lead Sam Miley said: “The Income Tracker reached a new high in December, capping off a year of solid growth in spending power. Looking ahead, we expect further improvements to take place in 2025, driven by continued growth in real earnings.

“This should help to support the wider economy, by encouraging consumption. Despite these positive developments, it should still be noted that spending power is down on pre-cost-of-living crisis levels when considering values in real terms.”

It comes as Asda is understood to be launching its largest Rollback campaign in years, as new chairman Allan Leighton aims to lead the supermarket’s price-cut revival amid fierce market competition.

The supermarket giant is set to unveil a new advertising campaign, offering major price cuts for products both in-store and online.