Asda income tracker shows spending power falling

he first Asda Income Tracker in 2011 has revealed that in December 2010 family spending power fell by £8 per week, the largest fall on record.

The decline in family spending power in December 2010 is the largest annual fall since the Asda Income Tracker began in March 2008 and spending power fell in annual terms during every month of 2010. When the impact of bonus payments is included, family spending power decreased by £9 over the year to December, a fall of 4.5%.

The average family had £172 per week to spend in December, down from £180 this time last year and for 2010 as a whole average weekly household disposable income was £4 below the average level for 2009 at £178, a 2.2% decrease.

The main driver of this downward trend is the disparity between consumer price inflation and sluggish earnings growth. Gross incomes (excluding bonuses) grew by 2.3% in December 2010 year-on-year, down from 2.6% in November whilst the cost of essential goods and services was 3.9% higher in December 2010 than in December 2009.

The main factors putting downward pressure on family spending power in December was the transport sector, which was by far the largest contributor to the headline rate of inflation in December with 6.5% annual growth. According to the AA, the cost of unleaded petrol rose by 12.7% in December 2010 year on year, up from 9.6% in November.

The improvements made in the labour market earlier in 2010 were reversed when unemployment rose to 7.9% over the three months to November, versus 7.7% the previous quarter as the economy surprisingly contracted by 0.5% in the final quarter of 2010, the first decline in output since the third quarter of 2009.

Source : Stockmarketwire.com