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ASDA Income Tracker shows families are 3 a week better off year-on-year

The latest Asda Income Tracker has revealed that family spending power continued to rise for the seventh month in a row, showing a sustained improvement for family finances. According to the latest figures, released today, the average UK family had £170 a week of discretionary income – the income left once taxes and the spend on essentials like rent, utilities and bills have been deducted – in April 2014, £3 a week higher than a year before but remaining below the all-time high of £174 seen in January 2010.

While families saw yet another boost to their incomes this month, the rate of growth slowed compared to the £7 increase seen in March. The slowdown was due to families benefitting from a much larger boost to their discretionary incomes last April, when the personal tax allowance threshold rose by £1,330, than this year’s smaller personal tax allowance increase of just £560.

The slower rate of growth is down to families benefitting from a huge boost in spending power last April when the personal tax allowance threshold rose considerably by £1,330, compared to this year’s smaller personal tax allowance increase of just £560.

A 0.2 percentage point rise in inflation also contributed to slower growth this month as the price of clothing and rent accelerated. However, inflation still remained below the Bank of England’s target of 2%, standing at 1.8%, thanks to a slowdown in the rate of inflation on food, gas and electricity. Homeowners saw a boost in their discretionary incomes too as mortgage interest payments fell year on year by 0.1%.

It was a record month for the labour market, as April saw the biggest year on year growth in the number of people in work for 25 years. This meant unemployment also stood at its lowest level since the start of 2009, dropping to just 6.8% in the last quarter. In the same period, regular wages also continued to rise steadily, growing by 1.3%, meaning families were left with more money to spend at the end of the month.

Commenting on the findings, President and CEO of Asda, Andy Clarke, said: “This is now the seventh consecutive month of growth and families are telling me that they are feeling a real benefit of having more money in their pockets. Essential item inflation on food, petrol and energy continue to fall-providing welcome relief to budgets and growing confidence in sustained economic recovery-which I believe will continue for the foreseeable future.

“Although discretionary income growth has slowed this month, this has been driven by the specific impact of a lower year on year increase in the Personal Tax Allowance and a slight rise in Consumer Price Inflation."

Rob Harbron, Senior Economist, Cebr, said: “Although growth in discretionary income saw a slowdown this month, it is encouraging to see spending power continuing to rise.”

“In addition, with labour market conditions expected to continue strengthening during 2014, further improvements to household finances are likely in the coming months.”

Source : ASDA Press Release

24 May 2014
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