Household income for poorest falls by 2.6%: "the cost-of-living crisis is far from over for those who can least afford it"

These figures reveal the uncomfortable truth that, for millions of households, living standards have barely improved since before the pandemic. While overall incomes are treading water, the sharp fall for the poorest households is particularly alarming — a clear sign that the cost-of-living crisis is far from over for those who can least afford it. This makes for depressing reading across the board, not least for Chancellor Rachel Reeves. Although the roots of the problem predate Labour’s election, the reality is that her much-touted growth agenda has yet to deliver any actual growth. The only person who might be quietly pleased is Nigel Farage, as last week's election results show Reform has clearly benefited from growing public disillusionment due to continued economic hardship.

The persistent decline in disposable incomes among Britain’s poorest households highlights a deep fragility at the heart of the country's much-heralded post-pandemic recovery. The issue is that incomes aren’t crashing but are plateauing, and this slower degradation of disposable income is easier to ignore by policymakers. The impact will be strongly felt in the retail market. A bifurcation of the retail landscape is likely to intensify, with premium and mid-market brands seeing demand reductions. Unless Westminster can reignite real wage momentum, the UK consumption engine will idle. And while the Bank of England may welcome signs of slowing household demand to assist their inflation battle, economic growth is still very much at risk. However, a two-speed economy is not a true recovery but rather a race where the slowest are left struggling at the starting line while the finishers claim victory.