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Asda Income Tracker: household spending power falls again in August

The latest Asda Income Tracker reveals that family spending power fell by £2 a week year-on-year in August 2013, as the cost of living continues to outpace household income.

According to the latest figures, released today (Monday 23rd September), the average UK family had £159 of discretionary income available to them in August 2013, down £1 on last month and well below its peak of £165, last seen in February 2010.

Slow pay growth was again a key factor, up just 1% in the year to August – just a third of the rate of essential item inflation (2.9%) and way below the pre-recession average of 4%

Annual food price inflation reached 4.1% in August, its highest rate for three months – the average UK food bill has now gone up by £655 a year compared to five years ago

Although unemployment this month fell for the first time in four months to 7.7% underemployment remains an issue – 1.45 million workers are unable to find full-time employment adding strain to their incomes

The latest decline means that the year-on-year change to weekly discretionary income has been steadily worsening since September 2012, mirroring a trend last seen in September 2009, a year after the onset of the recession. This suggests there is a lag between what the emerging recovery in the wider economy and its impacts on household finances.

In fact, had it not been for the rise in the income tax-free allowance in April – from £8,105 to £9,440 – household discretionary income would have fallen even further, by an additional £5 a week.

Further adding to the squeeze on household budgets this month was the cost of food, which rose by 4.1% in August, the highest rate for three months. The cost of food for the average UK household has gone up by £655 over the last five years, to £3,085 a year, and is expected to increase by a further 15.2% by 2018.

Asda president and CEO Andy Clarke said: "The positive news is that the UK is finally heading in the right direction along the road to economic recovery – but we can’t ignore the fact that this improvement hasn’t yet translated in real terms to more disposable income for families.

“The economic reality is also very different across the regions and the benefits of the recovery will only be fully realised when actions are taken to reduce this structural deficit.

“The income tracker is a core driver in helping us to understand and respond to the changing needs of consumers across the country and we are aware that rising food prices are a primary concern in the continued squeeze on budgets. We are investing heavily to keep this inflation at bay and encourage other retailers to take the same action in a bid to return the real pound to the pockets of consumers.”

Rob Harbron, Senior Economist, Cebr, said: "Although recovery in the overall UK economy continues to gather pace, the latest Asda Income Tracker results indicate that this is not yet feeding through into household finances.

“The latest slight decrease in the unemployment rate is welcome news, but until we see faster growth in wages, family spending power is likely to remain under pressure.”

Source : Your Asda
http://your.asda.com/press-centre/asda-income-tracker-september-2013

23 September 2013
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