UK households are slowing down their spending amid the cost-of-living crisis. May marks the fifth consecutive month of decreased spending power growth, according to figures from the Asda Income Tracker.

In May, overall discretionary income increased year-on-year by 3.5% to £9.19 per week, marking the third consecutive month of annual growth remaining below double digits.

However, discretionary income dropped by 4.5% month-on-month from April. The decrease affected low-income households in particular, as discretionary income plunged to its lowest since June 2024 at only £74 after bills and essentials.

The Asda Income tracker reported that current financial pressures have reduced spending power among the lowest-earning 40% of households compared to 2021.

However, annual inflation saw a slight decrease from 3.5% in April to 3.4% in May.

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Moving forward, inflation is expected to continue to stay above the Bank of England’s 2% target due to high energy prices.

While low-income households are struggling higher-income households, which account for about 40% of UK households, remain relatively unaffected by these issues.

The Asda data shows the highest-earning households have discretionary income going up by £4.80 to £902 per week, a significant difference from lower-earning households.

Sam Miley, Head of Forecasting and Thought Leadership at CEBR, which compiles the tracker for Asda, said: “There were marginal improvements in the Income Tracker in May, but households remain worse off than earlier in the year. Their spending power is being eaten up by elevated energy bills and rising food price inflation. These effects are particularly stark amongst low earners.

“Looking ahead, inflation is expected to remain elevated for some time, presenting a continued risk to the spending power outlook. Nevertheless, continually robust earnings growth will continue to support households.”