UK households saw a boost to their living standards at the end of 2024, according to official figures which follow upgrades this week to expectations for the years ahead.
The Office for National Statistics (ONS) reported, alongside unrevised data showing 0.1% growth in the economy during the fourth quarter, that real households disposable income (RHDI) per person increased by 1.7% over the period.
The measure of spending power, when the effects of inflation are included, was up from the 0.6% over the previous three months.
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The ONS said the bulk of the increase went to savings rather than being spent, explaining that consumer confidence had darkened at that time and unemployment was rising.
The disposable income figure was bolstered by public sector pay deals struck after Labour’s election victory and private sector pay awards remaining above the pace of price growth in the economy.
The Office for Budget Responsibility (OBR) predicted in its updated forecasts for the spring statement this week that disposable incomes would grow at about 0.5% on average each year between 2025 and 2030.
Chancellor Rachel Reeves said that equated to an annual boost of £500.
The ONS figures may help partly explain an unexpected 1% rise in retail sales volumes in February – a month when economists had widely expected a decline of 0.5%.
There is widespread evidence that economic growth has picked up over the past two months, since a surprise contraction of 0.1% was declared for January though much of that was accounted for in manufacturing and…
