Asda Income Tracker - Families £4 a week worse off

Family spending power fell by £4 a week in September, compared to the same month a year ago, marking the ninth consecutive month of annual decline, according to the Asda Income Tracker.

The tracker shows that the average family had a weekly spend of £177 in September compared to £181 in the same month last year, while the cost of essential goods and services rose by 3.3%. The research comes as the government prepares to unveil its Comprehensive Spending Review later this morning.

Gross incomes, excluding bonuses, rose by 2.6% in September but this failed to keep pace with annual consumer price inflation, which remained at 3.1% September.

Prices have been driven up by higher global commodity and labour costs, and the return of VAT to 17.5% at the start of the year. Clothing and footwear was the main factor putting downward pressure on family spending power over the month, with prices rising a record 6.4% between August and September. The annual rate of food and non-alcoholic beverage price inflation rose from 4.1% in August to 5.1% in September, which has placed upward pressure on the annual inflation rate.

Transport costs provided families with some relief, falling by 3.4% between August and September.

Charles Davis, the economist at Cebr, who compiles the report for Asda, said: “Soaring global commodity prices and rising labour costs are starting to feed through to higher essential goods prices in the UK.

“The rise in VAT to 20% in January 2011 will further squeeze household spending power over the next few months.”

Andy Clarke, Asda president and CEO, added: “The ninth consecutive month of decline in family spending power is significant and adds further weight to what our customers have already been telling us – it’s going to be a challenging Christmas for everyone.”

Source : U Talk Marketing.com