The real household disposable income has fallen at its steepest rate since 2011. The real household disposable income is the amount of money which families have to spend. This has decreased after the taxes and benefits were taken into account. This is the case even after wages have rose by 2.1%, however, taxes are at a greater increase.
The main reason for the fall is due to the rise in inflation, this has now rose to 2.9%. This rise is the highest inflation has been for 4 years. Intensifying to the struggle for household income.
Also due to the Brexit vote, the strength of the pound has weakened, therefore import costs have increased, including items such as food. This has had a negative impact of the rise of inflation, which is why inflation is at its highest in 4 years.
Including the real household disposable income falling, the real household per head has fallen for 3 months in a row, which is the first time this has happened since 2013, and may continue to fall in the next few months.
However, a different measurement of income has proved to show an improvement in income. This measurement is the net national income per head. This is calculated by the economies earnings divided by the number of adults. This measurement shows that household income has rose by 4.3%. Due to the increase of earnings abroad and the fall in the value of the pound.
