Asda Income Tracker: spending power rose £4 a week in September

The Asda Income Tracker shows largest improvement in disposable income since December 2009, but there is still a cautionary tale:

• UK families were £4 a week better off in September 2012 compared to the same month a year earlier, the largest rise since December 2009

• The average UK household had £149 a week of discretionary income in September 2012, 9pc up on the year before

• Improvements driven by a sharp slowing of inflation in September and a rise of regular earnings by 2pc year on year but uncertainty in the wider economy and labour market continues to cause concern

The latest Asda Income Tracker has revealed that family spending power improved for the fourth consecutive month in September.

The past four months of rising real discretionary incomes follows 19 months in a row of real discretionary income declines previously. The latest figures show the average UK family had £149 of weekly disposable income available to them in September 2012 – £4 a week better off than the same month last year.

It is the greatest annual growth since December 2009, highlighting the extent to which economic conditions have improved for family finances.

The improvement in disposable income is driven by a sharp slowing of consumer price inflation, falling to 2.2pc from the previous 2.5pc, and lower unemployment figures, helping to ease pressure on family budgets.

Inflation is at its lowest rate since November 2009 with clothing and electricity inflation falling. Unemployment dropped to 7.9pc in the three months to August – its lowest rate in almost three years.

But there is still a cautionary tale as data beneath the headline employment figure tells a less optimistic story, with as much as 59pc of gains to employment made up of part-time work. It suggests businesses remain unconfident about the future while inflationary pressures look to be ahead. And despite the lessening impact of inflation on household budgets, when the month is put in context over two years UK families are still £11 a week down on disposable income available in 2010 – budgets are still under pressure.

Four of the big six utility companies have announced price hikes for the last quarter of 2012, signalling another pressure on the inflation rate.

The cost of filling up the family car also remains a key factor, with fuel 2.8pc higher in September than the previous year.

Slow pay growth and a fragile economic outlook continues to hold back income growth and create concerns for families as the UK economy languishes in recession. Increased price pressures from the cost of food and fuel could emerge in future months, as crude oil prices remain high and food commodity prices look set to rise due to weak crop harvests worldwide.

The cost of petrol and diesel rose markedly in July and August, putting upward pressure on the inflation rate. Prices at the pump were on average 2.8% higher in September than the year before.

Asda president and CEO Andy Clarke said:

“The good news continues for UK families for now at least – with more disposable income in their pockets now than they had a year ago.

“However it’s worrying to see the cost of essentials creeping back up, and with winter drawing in the cost of heating and lighting a home will further increase the demands on family budgets.”

Rob Harbron, an Economist at Cebr said:

“The latest inflationary slowdown, decrease in unemployment and faster wage growth will be welcome news for UK families.

“Conditions for households are certainly looking up. However, risks do remain to the outlook as utility price rises are set for later this year and wage growth is likely to remain well below pre-financial crisis levels.”

Source : Asda
http://your.asda.com/press-centre