The average household in the UK had slightly more discretionary income in May compared to a year ago, but many remain under financial pressure, according to Asda’s latest income tracker.

The improvement in finances comes as inflation remained at its lowest since March 2025 at 2.8 per cent, with food and non-alcoholic drink inflation easing.

However, around one in five households (20 per cent) have £12 left after paying essential bills, while the lowest-income households have a weekly shortfall of £73.

This comes as higher-earning households continue to experience discretionary income growth as essentials affect a small proportion of their overall spending.

Subscribe to Grocery Gazette for free

Sign up here to get the latest grocery and food news each morning

According to the financial forecast, the warmer weather may reduce the overall pressure on budgets, but lower-income households will continue to face the pressure of rising living costs.

Sam Miley, head of forecasting and thought leadership at Cebr, said: “The Asda Income Tracker continued to show weak momentum in May 2026. While annual growth came in at 3.3 per cent, discretionary incomes grew by only 0.6 per cent month-on-month and remain below the levels seen in January of this year.

“The most recent labour market data show labour demand continuing to unravel, putting downward pressure on earnings growth. Meanwhile, elevated inflation is expected to be exacerbated once household energy prices are recalibrated in July.

“The prospect of interest rate cuts, which could drive stronger economic activity, is thus expected to be delayed at least until next year. These headwinds are likely to drive contractions in discretionary incomes from Q3.”