Nearly six in ten households now feel their weekly pay packet doesn’t stretch as far as it did a year ago, according to the latest data from Asda’s Income Tracker.

Growth in the Income Tracker slowed sharply in December, leaving the average UK household with £256 a week in discretionary income.

The deceleration marked an abrupt halt to the progress made over the previous three months, with the lowest-income households hit the hardest.

The lowest 20% of earners saw their spending power fall by 5.0% year-on-year leaving them with a £73 shortfall and struggling to cover essential bills and everyday spending.

Even middle-earning households, typically earning between £25,000 and £41,000 a year and representing 40% of all UK households, are now also worse off, following modest growth in November.

Spending power for households earning around £25,000 a year has since fallen by 7.1% compared with the same period last year, leaving them with just £12 a week remaining to spend after essential costs.

The pessimistic outlook for households going into the new year reflects weakening earnings growth alongside a pause in disinflation, with annual inflation rising to 3.4% in December.

Housing and utilities remained the largest contributor at 4.9%, while food and non-alcoholic beverages rose to 4.5%, driven by increases in bread and cereals. Transport costs, primarily airfares, pushed transport inflation to 4.0%.

Reacting to this month’s Income Tracker, Sam Miley, Head of Forecasting and Thought Leadership at Cebr, said: “Overall, 2025 has been a mixed year for the Income Tracker. Low inflation and strong earnings growth saw nominal discretionary incomes rise to record highs at the start of the year, before increases to employment taxes and wage floors in April increased cost pressure on businesses. This caused stronger inflation and weaker labour market conditions, prompting growth in the Income Tracker to stagnate.

“While Q4 has shown signs of recovery for household purchasing power, this has largely been down to a slowdown in underlying price pressures, rather than an acceleration in earnings growth. Looking ahead, despite an uptick in inflation in December, Cebr expects this trend to continue over the first half of 2026. Easing price pressures and weakening earnings growth are competing influences on the Income Tracker, creating substantial uncertainty for future performance.”