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UK households have weathered the worst of the cost-of-living crisis and can now expect to see their disposable income continue to rise this year, according to new figures from Asda’s Income Tracker.

Disposable income increased by 12% year-on-year in August, the fifth consecutive month of double-digit growth. After taxes and essential spending, the average UK household had a disposable income of £247 per week last month, surpassing the pre-cost-of-living crisis peak of £246 per week achieved in March 2021.

While inflation levels as a whole remain unchanged since July, inflation on food and drink slowed to 1.3%. Prices for essential groceries continuing to drop as inflation on these items eases, UK households can now expect their spending power to continue to improve.

Inflation has also dropped by 5% since last August, and combined with the steadying of spending power, the average UK households will now likely have more cash in their hands in the run-up to Christmas.

While there are reasons to be positive, the lowest income households will continue to feel the impact of the cost-of-living crisis for a little longer. The spending power of these households is increasing slower than others, meaning for many people, their net income does not cover bills and essential spending – leaving them with an average weekly shortfall of £66.

Pushpin Singh, senior economist at Cebr, which compiles the tracker for Asda, said: “Despite the recent slowdown in earnings growth, annual wage growth continues to outstrip annual growth in consumer prices.

“With inflation now 5% lower year-on-year, further increases in spending power are expected in the coming months. That said, growth in spending power is expected to slow as wage growth eases further and inflation remains sticky at a level above the 2% target for some time. This could mean some households will take longer to fully escape the effects of the cost-of-living crisis.”

Morning update

Spirits group Distil has managed to secure £650k in funding, raising the cash through a placing with two of its leading investors.

It will provide working capital, including money to fund production and promotions for Christmas.

Executive chairman Don Goulding said: “This funding will support working capital and brand activation over the key trading period October through December and enable us to compete as we seek to expand distribution in 2025.”

Eagle Eye has secured a five-year contract for its AIR platform to power the loyalty scheme of a leading retailer in the UK.

CEO Tim Mason said: “We are delighted to win another major retailer in the UK, consolidating our position as market leader for loyalty and promotions software.

“The five-year contract provides increased visibility over further growth of Eagle Eye, this year and beyond.”

This week in the City

Newsflow on the markets slows down a little this week as the Labour Party Conference in Liverpool gets underway.

Tomorrow brings first-half results from Irn-Bru owner AG Barr, while the Co-op reports interims on Wednesday.

And Morrisons is set to give an update on how its turnaround is going, with Q3 results on Thursday.