Declining Spending Power Among UK Households: October 2026 Insights

In October 2026, Asda's Income Tracker revealed that 60% of UK households experienced a decline in spending power for the fourth consecutive month. This trend is particularly pronounced among low and middle-income families, with approximately 20% of households earning £11,000 ($14,405) or less facing an average weekly deficit of £74. Additionally, 40% of households earning around £25,000 reported having only £10 left for discretionary spending after covering essential expenses.

Asda warns of continued fall in UK household spending powerAsda: Fourth Consecutive Month Of Spending Power Decline For ManyData: UK household spending power continued to decrease in OctoberFour in ten UK households face cash squeeze as spending power falls again

The data indicates that households with annual incomes of about £41,000 retained only £90 after paying for necessities. The essential basket of goods tracked by Asda's Income Tracker rose by 4.6% year-on-year, with inflation remaining high at 3.6%, despite showing its first annual slowdown since May 2025. Notably, water charges surged by 26.4% year-on-year, while food prices increased by 4.9%, with bread and cereals rising by 1.2% between September and October.

Asda: Fourth Consecutive Month Of Spending Power Decline For ManyAsda warns of continued fall in UK household spending powerFour in ten UK households face cash squeeze as spending power falls againData: UK household spending power continued to decrease in October

Households headed by individuals aged 30 to 49 were identified as the most financially vulnerable, facing average weekly essential spending of £799 and monthly tax bills of £281. This demographic is particularly exposed to rising costs, as their earnings growth continues to lag behind the increasing expenses and tax burdens.

Asda: Fourth Consecutive Month Of Spending Power Decline For Many

Sam Miley, head of forecasting and thought leadership at the Centre for Economics and Business Research (Cebr), noted that while the inflation data for October suggests that inflationary pressures may have peaked, significant risks remain for household incomes. Miley highlighted that worse-than-expected labor market figures for September indicate a weakened UK labor market, exacerbated by increased employment costs and weak demand. He cautioned that the upcoming November Budget could further strain household finances, as both households and businesses await clarity on the fiscal burden they may face.

Data: UK household spending power continued to decrease in October

Critics argue that the ongoing decline in spending power reflects broader economic challenges, particularly for low-income families. The Cebr has warned that cost-of-living pressures may intensify as the festive season approaches, potentially leading to increased financial strain for many households.

Four in ten UK households face cash squeeze as spending power falls again

• “While the outturn inflation data for October supports Cebr’s view that inflationary pressures have peaked, there remain considerable risks to the outlook for the Income Tracker.” — Sam Miley, Head of Forecasting and Thought Leadership, Cebr

Four in ten UK households face cash squeeze as spending power falls again

• “Prospects for the UK economy are also not helped by the high likelihood of fiscal contraction in the November Budget.” — Sam Miley, Head of Forecasting and Thought Leadership, Cebr

Asda: Fourth Consecutive Month Of Spending Power Decline For Many

Asda remains committed to supporting its customers by offering competitive pricing, despite the rising costs of essential goods. The ongoing decline in household spending power underscores the challenges faced by many UK families, particularly as they navigate an uncertain economic landscape ahead of the November Budget.

Asda: Fourth Consecutive Month Of Spending Power Decline For Many