New figures compiled by Asda for January show that families’ average disposable income has dropped by £9 a week compared to the same time last year.
After essential outgoings, the average family had £174 a week left to spend – down from £183 a week in January 2010. The figures show a nation continuing to struggle against increasing inflation.
It marked the 13th month in a row in which a drop in disposable income has been measured – and represented the biggest drop since the supermarket began collecting data in 2007.
Asda said the ongoing decline in consumer spending power was a result of the price of essential goods and services increasing faster than family incomes. The Consumer Price Index, the key measure of UK inflation, rose to 4 per cent in last month, compared to a 2.4 per cent increase in average incomes in the previous 12 months.
The situation seems unlikely to reverse in the short term – as higher petrol prices and the VAT hike continue to exert upward pressure on inflation.
Economist Charles Davis said: “With annual Consumer Price Index inflation double the Bank of England’s target rate, while earnings growth remains modest, average households are seeing spending power sharply eroded. This trend is likely to continue into 2011, as inflation remains elevated and the labour market recovery lacks conviction.”
