Average disposable income in the UK rose slightly in January 2026, but young adults and the lowest-income households are still worse off than before the cost-of-living crisis. Under-30s and those aged 30-49 saw declines in discretionary income, with younger adults facing a £20 weekly shortfall compared to pre-crisis levels.

Data from Asda’s income tracker showed a £4.24 year-on-year increase in average household spending power to £261 per week after essentials. Despite this, the lowest-earning fifth of households continue to struggle, facing a £71 shortfall between income and essential costs in January.

Inflation eased to 3% in January, the lowest level since March 2025. Food and non-alcoholic beverage inflation moderated to 3.6%, while housing and utilities costs rose 4.5% year-on-year. Vehicle fuel prices declined 2.2%, helping to slow transport inflation to 2.7%.

The highest-income group in the UK saw a 1.9% annual rise in purchasing power, widening the weekly gap between the richest and poorest households by £18.89 compared to a year earlier. Asda predicts inflation will move towards the Bank of England’s 2% target by the second half of 2026, supporting discretionary income growth.

Read more at Yahoo Finance: UK disposable income edges up, but young and poorest lag, says ASDA