The cost of essential basket goods and services rose by 4.2% year-on-year in January – the fastest rise since March 2024, new figures from Asda show.

The supermarket’s latest Income Tracker, supplied by Cebr, shows that annual inflation is the cause of the recent price increases, having risen to a 10-month high of 3% last month.

Asda said this was driven largely by rising transport costs, as well as more expensive food and non-alcoholic beverages – with prices of staple products such as bread, cereals and meat products particularly impacted by inflation.

However, in January, average household disposable income reached £254 per week – an increase of £25.74 per week year on year.

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While gross income growth remains above inflation, the grocer said that its slowdown in January to +5.2% will add “further constraints” to household budgets.

The lowest-earning households were most affected by rising inflationary pressures, facing a shortfall of £69 per week last month, meaning their take home pay was not enough to cover bills and essentials.

Younger working households are set to be the hardest hit, as they typically earn less yet still face the same essential costs as other households.

Despite the uptick in inflation, Cebr managing economist and forecasting lead Sam Miley said: “Household incomes are growing at a faster pace than prices, and this trend is expected to persist throughout 2025 as households continue to recover from the worst of the cost-of-living crisis.”