Families now £13 a week worse off

Families are £13 a week worse off than they were a year ago as prices continue to grow at twice the rate of pay increases, research indicates.

The typical family saw their disposable income drop by 7.1%, or £13 a week, during April compared with the same month of the previous year, according to supermarket group Asda.

The group said steep price rises had led to people typically having just £167 a week left over once they had paid all of their essential outgoings, such as the rent or mortgage, utilities and transport costs.

It warned that the situation looks likely to get worse, with inflation as measured by the Consumer Prices Index rising from 4% to 4.5% during April, and the Bank of England has warned it may increase further during the coming months, largely due to anticipated price hikes to utility bills.

Soaring petrol prices and higher train fares mean families are now spending around 10% more on transport than they were a year ago, with petrol prices 12.7% higher than in April 2010. Higher rents and heating costs have also taken their toll on families' budgets.

The steep price rises that families face are being exacerbated by the fact that wages are growing at only around half the level of inflation.

Andy Clarke, chief executive of Asda, said: "Spending power has seen another significant fall this month which is adding further pressure on family budgets."

Charles Davis, managing economist of the Centre for Economics and Business Research, which compiles the index for Asda, said: "While the Asda Income Tracker showed signs of stabilising in March, as falling food prices pushed down inflation, subsequent rises in transport and utilities prices have pushed the cost of living back upwards.

"This is being compounded by lacklustre annual earnings growth, which is currently running at less than half the rate of inflation.

"Households are under significant financial duress at the moment and it looks like high inflation will keep up the squeeze throughout the year."

Source : Mirror.co.uk
www.mirror.co.uk/news/latest/2011/05/22/families-now-13-a-week-worse-off-115875-23147657/