Asda Income Tracker: UK families £12 a week worse off in December 2011 than 2010

The latest Asda Income Tracker has revealed that family spending power fell by £12 a week in December 2011 – driven by a sharp increase in unemployment, despite seeing some improvements in the cost of living. This left the average UK family with £160 of weekly disposable income – 7.2 per cent down from the same time last year.

Annual consumer price inflation slowed to 4.2 per cent in December. This is the third consecutive improvement in the rising cost of living, helping to ease pressures on household spending power. However, this improvement is overshadowed by the high number of workers becoming unemployed – pulling household finances in the opposite direction. Unemployment increased to 8.4 per cent during the three months to November – conditions not seen since November 1995. As costs go up, discretionary income levels continue their downward trend, with younger workers facing particularly tough employment conditions.

In addition to the growth in unemployment, those in work saw average regular wages grow by just 1.9 per cent over the year, and as a result family budgets continue to be squeezed further by the rising price of basics. The cost of heating and lighting the home continues to rise, with gas and electricity prices growing by 19.8 and 14.1 per cent respectively over the year to December.

As in 2011, the cost of transport continues to be one of the largest downward pressures on disposable income into 2012, with the cost of getting of petrol and diesel rising by 8.5 and 11.8 per cent respectively according to the AA. This remains high despite a fall in the cost of petrol actually falling during December itself – compared to a strong rise during the same month in 2010.

Andy Clarke, Asda President and CEO, said:

“It’s encouraging to see the cost of some essentials coming down, easing the pressure on family budgets and redressing some of last year’s inflation.

“However we know jobs still matter, with the highest levels of unemployment for 17 years having a real impact on the way families feel.

“Unemployment drove the continued drop in disposable income in December, with a growing divide between the nations and regions.

“We’re firm in our commitment to help tackle this in 2012, by creating new jobs, working with new communities and bringing Asda value to families.”

Charles Davis Managing Economist, Cebr comments:

“Slowdowns in the rising cost of living as inflation falls is good news for UK consumers, taking some pressure off family budgets.

“However, weak employment prospects will increasingly act as a drag on household finances. Private businesses are reluctant to hire and this, combined with public sector job cuts, is likely to result in continued weak wage growth. Unfortunately it is expected to be some time before consumers start to see significant gains to real incomes.”

Earlier this week Asda announced its commitment to being a job creator – promising to provide up to 5,000 new jobs across the country in a £500m investment in its UK stores and depots in 2012. The retailer confirmed plans to open 25 new stores across and three depots in 2012 – as well as extend and refurbish 43 of its existing stores. Prime Minister David Cameron welcomed the news saying that the new jobs will be a ‘real boost to the economy’.

Source : Asda
http://your.asda.com/press-centre/disposable-income-fragile-as-record-unemployment-holds-back-disposable-income-growth