Household spending power has reached its lowest point in six months, as rising costs for necessities like food, housing, and energy have outpaced wage increases. According to the latest data from Asda’s income tracker, while wages have continued to grow, the rising prices of essential goods and services have taken up a larger portion of household income, leaving families with less money to spend on non-essential items. The data shows that essential costs rose by 3.9% in August, slightly more than the 3.8% increase in household incomes over the same period. This means that, on average, families are left with about £260 per week after paying for bills and other necessary expenses. The Asda Income Tracker measures how much money households have left after paying taxes and essential bills. In August, the growth in this spending power slowed to 3.4%, the lowest level since March. The impact has been particularly severe for lower-income households, whose spending power has dropped by 1.9% over the past year. These families now face an average weekly shortfall of £75 between their earnings and the cost of essentials, highlighting the growing financial strain on those with lower incomes. Looking ahead, Asda suggests that household budgets are likely to remain under pressure in the coming months. Inflation has risen to a five-month high of 3.1%, and the Bank of England has indicated that interest rates may increase again if inflation remains high. Higher interest rates can lead to increased borrowing costs for mortgages and loans, which can further reduce disposable income for households. Pushpin Singh, a managing economist at Cebr, which produces the tracker, noted that the slowdown in the Asda Income Tracker to 3.4% in August is the weakest since March. While wage growth has increased slightly, it has been outpaced by a significant rise in inflation. Singh emphasized that inflation remains the main threat to household spending power. Rising essential costs, combined with the potential for higher interest rates, could place additional pressure on discretionary spending in the months to come.