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Asda Income Tracker: Spending power drops to November 2008 level

• UK families were £10 a week worse off in March 2012 compared to the same month a year earlier, the joint-lowest level of disposable income since November 2008
• Average UK household had £144 a week of discretionary income in March, 6.5 per cent lower than a year earlier.
• Rising unemployment and persistently high inflation rate driving disposable income down
• Regional Income Trackers highlight widening disposable income gulf in UK

The latest Asda Income Tracker has revealed that family spending power fell by £10 a week in March 2012 – reversing the improving trend seen in recent months. This left the average UK family with £144 of weekly disposable income, 6.5 per cent down from the same time last year.

The official measure of the rising cost of living was up in February, as the consumer price index (CPI) rose over the year by 3.5 per cent, well above average earnings growth which remained weak at just 1.6 per cent. When slow income growth is added to high inflation on the cost of basics it’s clear that family spending power is being squeezed in both directions, resulting in disposable income levels eroding further.

As well as those that are in work seeing small year on year salary increases, well below inflation, tough conditions in the labour market mean unemployment is still having an impact despite slight year-on-year improvements in the headline rate. Balancing the two conflicting elements, family income growth is still very fragile, with the improving cost of basics overshadowed by the high number of workers becoming unemployed.

Despite some recent improvements in the cost of utilities and transport with a drop in wholesale prices and energy providers making cuts to bills in March, they are still two of the main factors putting pressure on discretionary spend. The cost of electricity and gas remains well above that of last year and are rising again by 8.1 and 16.1 respectively in March. Petrol and diesel prices by 4.2 and 4.7 per cent respectively over the year, with prices at the pump hitting an all-time high during the month.

Andy Clarke, Asda President and CEO, said:

“It’s worrying to see the cost of essentials creeping back up, increasing the demands on family budgets and putting pressure income growth. Unemployment drove the continued drop in disposable income in March and throughout the quarter, 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 where it matters most to families across the UK.”

Charles Davis Managing Economist, Cebr comments:

“Family budgets in 2012 are continuing to be squeezed by the three pressures of high unemployment, very weak wage increases and stubbornly elevated inflation. While growth in the price of essentials is likely to fall back slowly this year, the current tough conditions in the UK labour market look set to prevail. Average earnings growth is expected to trail inflation over 2012, keeping pressure on household incomes. As such we are likely to see continuing declines on the Asda Income Tracker over the coming months, although at a slower pace than during 2011.”

Source : Asda
http://your.asda.com/press-centre/disposable-income-lowest-since-2008-as-gulf-between-regions-widens-further

24 April 2012
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Insight provides a host of information I need on many of our company’s largest customers. I use this information regularly with my team, both at a local level as well as with our other international operations. It’s extremely useful when sharing market intelligence information with our corporate office.

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Paul Boyce - European CEO, QEP Ltd.
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