UK households are £4 a week worse off than a year ago and further pressure is likely to be piled on throughout this year, according to Asda's income tracker.

In December 2008, households had£137 a week to spend in discretionary income – 2.9 per cent less than a year earlier, the tracker found.

However, the VAT cut and falling commodity prices helped reduce commodity prices in December to£413 a week. But, as the UK is now officially in recession and the jobs market is weakening, 2009 is likely to remain tough, it said.

Asda president and chief executive Andy Bond said: “Though the cost of living has come down for families in the last few months a combination of higher import prices due to the weakness of the pound and rising unemployment affecting earnings growth will put household budgets under renewed pressure.

“We cannot underestimate the impact this downturn is having on UK families and how important it is that action is taken to restore confidence in the banking sector and wider economy.”

Following peak inflation in September, the income tracker has risen for three months in succession. Consequently, the year-on-year fall in the income tracker has shrunk from£13 a week in September to£4 a week in December.

One of the major upward contributors to the squeeze on disposable incomes last year was the rise in the cost of utility bills, which rose by 14.3 per cent over the year to December.

This hike came as wholesale gas prices rose as much as 78 per cent year on year, reaching a peak in June. Since then, wholesale gas prices have more than halved and utility companies are starting to pass on these falls.

The weakest sterling value since the mid-1980s is likely to cause some import price inflation, exerting some upward pressure on UK prices.

Asda’s income tracker is produced by the Centre for Economics and Business Research.

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