UK families £15 a week worse off

The latest Asda Income Tracker has revealed that family spending power fell by £15 a week in September 2011 – the third consecutive month of record breaking decline. The squeeze left the average UK family with £163 of weekly disposable income – 8.4 per cent down from this time last year.

September saw a £15 a week fall in family spending power compared to the same month last year – the biggest drop since records began in 2007. Average UK household had £163 a week of discretionary income in September 2011, 8.4 per cent lower than a year earlier.

Over a third of people say the cost of utilities is the biggest drain on the family purse. Asda customers say utilities and fuel costs remain the biggest pressure on family disposable income.

Annual inflation on the consumer price index grew again to 5.2 per cent in September, up 0.7 percentage points from August, placing significant pressure on household spending power.

Family budgets are squeezed further by the rising costs of basics. The rising cost of heating and lighting the home pushes the overall rate of inflation even further above the Bank of England’s target rate of 2 per cent. In September, electricity prices were some 12.9 per cent higher than a year ago, while gas prices were 22.3 per cent higher.

The cost of transport continues be the largest downward pressure on disposable income, with the cost of getting around increasing 17.7 per cent year on year in September according to the AA.

Discretionary spend in London was £276 per week in Q3, compared to a UK average of £163, although down from £299 in the same period in 2010. Northern Ireland continued to suffer from the lowest household spending power, with the Income Tracker figure for the region dropping for the third consecutive quarter to just £76 per week in Q3, from £94 the same quarter the year before.

Asda’s own research shows that customers are adapting to family budgets being squeezed from all sides. A survey conducted on the retailer’s Facebook page last week indicated that customers were feeling the pressure, with over a third (36 per cent) citing utility bills as having the biggest impact on family budgets. The cost of getting around and filling the fridge were close behind, with 27 and 26 per cent (respectively) of people claiming transport and food bills as the biggest cost pressure. One in ten people (ten per cent) claimed preparing for the festive season put their budget under strain.

Andy Clarke, Asda President and CEO, said: “For eighteen consecutive months we’ve seen a decline in family spending power. While disposable income was down everywhere in September, there is clearly a growing divide between the North and the South."

Charles Davis Managing Economist, Cebr comments: “Family spending power continues to be under significant pressure from the three-pronged threat of fragile wage growth, rising unemployment levels, and soaring consumer price inflation. As utility price increases continue to feed through into erosions in family budgets, a tough couple of months lie ahead. However some pressure could ease from the start of 2012, as inflation is expected to fall back.”

Source : Asda Press Centre
http://your.asda.com/2011/10/25/disposable-income-sees-record-drop-again-as-utility-costs-put-pressure-on-budgets