Business

Disposable income at nine-year low, ONS figures show

  • 31 July 2012
  • From the section Business
Sterling notes and coins
Population growth, prices and wages all had an effect on the income figures

Individuals had less disposable income to spend on average in the first three months of the year than during any quarter since 2003.

Disposable income per head, taking inflation into account, fell by 1% on the previous quarter, the Office for National Statistics (ONS) said.

This measure of income is the amount of cash individuals have to spend after tax.

Meanwhile, savings levels dropped as families felt the squeeze.

'Population growth'

The ONS figures show that 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.

This was the lowest level since the second quarter of 2005.

The increase in prices over this period eroded the growth of household income, the ONS said.

Income, primarily from pay, weakened. A number of firms had frozen pay because of the financial situation in the UK.

"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, in the report on the economic position of households .

It estimated on average people have a disposable income of £273 a week, and the ONS figures show that families were cutting their spending and saving levels.

Real household actual expenditure fell in the first three months of the year to its second lowest level since the third quarter of 2003.

However, this safety-first approach has also meant that households have been paying off debts, such as mortgages, following the financial crisis.

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