Average household is £14 a week worse off

The cost of living has risen 6 per cent year-on-year, according to Asda.

Households had£130 a week of income left after tax and essentials in September, a fall of 9.6 per cent year on year. The average family has£14 a week less to spend on leisure activities and services than in September last year.

Inflation on essential goods rose 6 per cent during the month, driven by a 4.4 per cent month-on-month rise in gas and electricity prices.

Asda said the falling trend has also been affected by weaker earnings growth, with 164,000 jobs lost in the quarter to August.

Asda said that the average family had “better news” as food price inflation peaked. Food prices fell in September with annual inflation on food and drinks down to 11.3 per cent from 13 per cent in August.

Asda chief executive Andy Bond said: “Today’s figures show that there is still massive financial pressures on UK households and all retailers must put families first and continue to deliver value on petrol, food and essentials.

“The income tracker does provide an optimistic outlook, predicting inflation will drop sharply in 2009. I would like the MPC [Bank of England] to be bold and cut interest rates further to help restore consumer confidence in the run-up to Christmas.”