Average UK household disposable income improved in January 2026, but young adults and the lowest earners remain financially worse off despite easing inflation.

The January update from Asda shows the average UK household had £261 per week left after essential spending — up £4.24 year-on-year.

Inflation slowed to 3.0%, its lowest level since March 2025. But the improvement in spending power is uneven.

Quick facts

  • Average UK household disposable income: £261 per week

  • Annual increase: £4.24

  • Inflation: 3.0%

  • Under-30 disposable income: £175 per week

  • Under-30s around £20 below pre-crisis level

  • Lowest 20% of earners face £71 essentials shortfall

What The January 2026 Disposable Income Data Shows

The UK disposable income tracker measures how much money households have left each week after paying for essential costs such as housing, food, utilities and transport.

In January 2026, the average household had £261 available after essentials. That represents modest annual growth, largely supported by easing inflation rather than strong wage acceleration.

However, the aggregate number masks structural pressure within specific demographic groups.

Most middle-income households experienced small improvements in discretionary income. But both under-30s and lower earners recorded year-on-year contractions.

This indicates that while headline inflation is slowing, recovery remains uneven across income distribution bands.

Why Young Adults Remain Financially Exposed

Under-30s recorded average disposable income of £175 per week in January. That remains well below the £195 per week peak recorded in March 2021.

Younger households typically allocate a higher proportion of income to essential spending. Close to 70% of gross income now goes toward housing, food, energy and other core costs.

Many in this cohort are renters rather than homeowners, making them more exposed to sustained rent increases over recent years. They also face comparatively higher effective tax burdens relative to income growth.

As a result, despite moderating inflation, this group remains around £20 worse off than before the cost-of-living crisis.

The slowdown in price growth has stabilised pressure, but it has not reversed earlier erosion in purchasing power.

Lowest Earners Still Facing Income Shortfall

The lowest 20% of earners experienced a contraction in disposable income compared with January 2025.

This group faces a £71 gap between earnings and essential costs. In practical terms, essential expenditure continues to exceed income.

Although inflation has eased to 3.0%, cumulative price increases in food, utilities and housing continue to weigh heavily on this segment.

For lower-income households, the combination of slower wage growth and elevated essential costs limits recovery potential in the short term.

The January data suggests that disinflation is improving conditions gradually, but it is not yet restoring purchasing power at the bottom of the income scale.

Why This Matters For UK Supermarket Demand

Disposable income trends directly influence grocery behaviour.

When younger households and lower earners remain under pressure, supermarket demand shifts accordingly.

Smaller basket sizes, increased promotional sensitivity and greater private label penetration typically follow periods of constrained discretionary income.

Even as overall household disposable income improves slightly, structural caution is likely to persist among financially stretched demographics.

For UK supermarkets, this points to continued emphasis on value positioning, entry-price tiers and targeted promotions during early 2026.

The January data signals a two-speed consumer recovery — modest stabilisation at the average level, but continued fragility at the lower end of the income spectrum.

Editor’s Note: Data based on January 2026 update from Asda’s Income Tracker.