Asda Income Tracker: Families £4 a week worse off in September

September was the ninth consecutive month of annual decline in Asda’s tracker, with UK household discretionary income 2.1% lower than in September 2009.

The average family had £177 per week to spend in September, down from £181 this time last year.

The results come ahead of the government’s Comprehensive Spending Review, to be revealed at 12.30 today.

The cost of essential goods and services was 3.3% higher in September than last year.

However gross incomes, excluding bonuses, were 2.6% higher. However, this was outstripped by annual consumer price inflation which remained unchanged in September from August at 3.1%.

The main factors putting downward pressure on family spending power were clothing and footwear, prices of which rose by 6.4%.

The most significant area of spending which has helped with household’s discretionary income was transport costs, which fell by 3.4% between August and September.

Charles Davis, the economist at Cebr who compiles the report for Asda, said: “Family spending power was still down on the previous year in September. The growth in household earnings as the economy recovers from recession is failing to keep pace with rising prices of essential goods and services.

“Soaring global commodity prices and rising world labour costs are starting to feed through into higher essential goods prices in the UK. Cotton prices are currently trading at a 15 year high and many clothing retailers have warned that they will inevitably have to raise their prices in response to this. The effect of the summer drought in Russia on wheat prices is also continuing to feed through into rising food prices.

“The rise in VAT to 20% in January 2011 will further squeeze household spending power over the next few months.”

Andy Clarke, Asda chief executive, said: “The ninth consecutive month of decline in family spending power is significant and adds further weight to what our customers have already been telling us - it’s going to be a challenging Christmas for everyone.

“In fact, shoppers are already stocking up on toys and big tins of chocolates in a bid to spread the cost of the festive period.

“We’re acutely aware of our responsibility to put our shoulder to the wheel and do everything we can to keep lowering costs, and keep the cost of living down for all our customers.”