Disposable income falls at the fastest rate since 2011, ONS says

Britons saw the biggest quarterly decrease in their disposable income since 2011 in the first three months of 2017, the Office for National Statistics said on Thursday.

Rising inflation appears to be the main driver behind falling disposable incomes, which were 2% lower in the first quarter of the year.

In the ONS report on economic well-being in the UK, the 2% fall was calculated through the real household disposable income (RHDI) marker. The net national disposable income (NNDI) increased by 4.3% per head between the first quarter of 2016 and the first quarter of 2017.

Significantly, consumers reported an improved perception of their financial situation, despite the RHDI decline.

Laith Khalaf, senior analyst at Hargreaves Lansdown, said households may not be fully aware of the effect of rising inflation and stagnant wages.

Khalaf said: "The pressure is ratcheting up on UK households, but consumers don’t seem to be fully aware of the crunch that is underway.They have clocked rising prices, but as yet don’t see this has significantly dented their finances.

"They may well be right, inflation takes time to really bite into household budgets, but the risk is by the time it’s happened, it could be too late to do much about it."