NI Families Face Record Drop in Purchasing Power Amid Rising Inflation

The spending power of an average family in Northern Ireland has contracted by 28.7% year-on-year, the biggest annual fall of any region in the UK in history from the Asda Income Tracker.

n independently compiled by Cebr, the latest report reveals that the average NI family is left with just £95.10 a week to spend on discretionary goods and services in Q3, down £38.30 from 133.40 £ a year ago.

A greater concentration of spending on high-inflation categories such as food, energy and fuel is driving the shocking drop in disposable income for NI families, Cebr said, alongside a lower employment and lower wages.

In addition, with inflation expected to continue to rise, a further decline in purchasing power is expected for the fourth quarter and into 2023 as mortgage rates rise.

For the UK as a whole, average discretionary income fell by £34 or 14.1% to £209 per week.

The quarterly Income Tracker report highlights a growing gap between Northern Ireland and other parts of the UK, reinforcing its position as the worst performing region.

The North East is closest to Northern Ireland, with a weekly Discretionary Income of £129.20. Meanwhile, London leads the league, with the average household having £264.70.

After a 28.5% fall, Northern Ireland is one of only two regions in the UK to see a bigger annual decline in Q3 than Q2, alongside the West Midlands.

On a quarterly basis, NI also saw a fall in discretionary income, with the average household counting on £98.30 a week in the second quarter, after taking into account all taxes, bills and essentials. This trend contrasts with the UK average, which fell from £205 in Q2 to £209 in Q3.

Cebr attributes the UK-wide quarterly improvement to a combination of faster revenue growth and changing tax policies, such as National Insurance payments.

“Figures this month have shown that purchasing power in Northern Ireland is falling to a record low as the cost of living crisis eats away at household budgets,” said Sam Miley, Senior Economist and author of Income Tracker, Cebr.

“Accelerating inflation has impacted the Income Tracker and we expect it to peak in the fourth quarter, further damaging purchasing power and contributing to recessionary pressure across the UK.

“Northern Irish households have been hit particularly hard by inflation, with their spending more heavily concentrated in high inflation categories such as food, energy and fuel.

“Northern Ireland’s purchasing power is also affected by weaker income growth. This is explained by the composition of the country’s labor market, with a lower employment rate, a higher inactivity rate, a higher proportion of employees earning less than the living wage and a higher share of public sector employment, which has now seen wage growth outpaced the public sector for 17 consecutive months.

“The Income Tracker is expected to deteriorate materially in the fourth quarter when inflation is expected to peak. Further weakness is expected in 2023 when inflation is expected to remain above historical averages. Rising mortgage rates will also put additional pressure on households, with the Bank of England set to continually raise rates until the middle of next year in an attempt to combat this price growth.

George Rankin, Principal, Asda NI, said: “After 13 years, the Income Tracker continues to present a very meaningful insight into the evolution of purchasing power, its correlation with the economy and its wider impact. on people living in Northern Ireland.

“We are all dealing with the realities of the cost of living crisis and as a retailer we know the challenges families face, day in and day out. We are doing what we can to close the gap and help household budgets stretch as much as possible. We will continue to review all measures that will help support those who shop in our stores. »