British families suffered steepest drop in disposable income for almost four years last month as slow wage growth and rising energy bills hammered spending power.

UK households had £194 of discretionary income in May, £4 per week less year-on-year.

The 1.9% decline in spending power was the quickest decline since September 2013, according to the latest Asda Income Tracker.

Families with the lowest income of around £179 per week on average suffered the steepest decline, slumping 28%.

By contrast, those earning the most – around £1,920 per week – registered broadly flat disposable income.

More than half of customers surveyed said they thought their disposable incomes would fall again in June.

The Asda Income Tracker also revealed that the cost of essential items increased 2.3%, driven by a spike in energy prices.

Households were particularly hit by a 7.7% hike in electricity prices compared to May 2016.

Vehicle fuels rose at a similar rate, increasing 7.5% year-on-year.

Cebr senior economist Kay Neufeld said: “The second consecutive month of falling family spending power confirms our expectations of a trend change in the Income Tracker.

“Families are faced with broad-based increases in the prices of essential goods and services as wage growth falls further behind.

“Unfortunately, the squeeze in households’ finances is expected to continue over the next months as we see little evidence that wage growth will pick up, and neither have we reached peak inflation just yet.”

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