1 August 2012

Disposable income falls to lowest level in almost a decade

The average disposable income has fallen to its lowest level in nine years, latest figures suggest.

According to data released by the Office for National Statistics (ONS), individuals’ after-tax income dropped by 1% in the first three months of the year.

It means that, on average, households have less cash to spend than in any quarter since 2003.

Meanwhile, real household actual income per head, before tax and services provided by the state, fell by 0.6% in the first three months of the year, compared with the previous quarter.

Stagnant wages, price increases and population growth are all thought to have contributed to the steady decline.

‘Finally, sustained population growth led to incomes being spread across a greater number of people, and therefore further reduced the growth of actual income per head,’ the ONS said.

With many families feeling the squeeze, the ONS’ figures suggest that household spending has dropped to its lowest level for eight years, while savings levels have also fallen.

Back to news