The average UK family was £8 a week better off last month compared to a year ago, thanks to inflation being at its lowest level since February 2005 and low interest rates on mortgages, according to data from Asda.
The average household had £160 a week of discretionary income last month, 5.2 per cent higher than a year earlier, Asda’s quarterly income tracker report also found.
After tax, the average family had £1 a week more net income than in August 2008. This was the smallest annual increase in gross income since April due to a weakening of earnings growth, rising unemployment, and an increase in cost of some essential items such as fuel.
Asda president and CEO, Andy Bond, said: “With inflation now at its lowest level in three years, it’s important that retailers pass on the savings they’re making as quickly as possible. Many of our customers are still cautious despite a year on year increase in spending power.”
Charles Davis, an economist at the Centre for Economics and Business Research, a consultancy which produced the report for Asda, said: “The Asda income tracker continues to show that Bank of England cuts have provided a significant boost to average family spending power. However, unemployment stands at its highest level since 1995 and is set to rise into 2010 while earnings growth is at historically low levels.”
Food prices fell in August from the previous month, while mortgage interest rates have almost halved in the last year, Asda said. In addition, household energy bills have begun to stabilise; electricity and gas prices were unchanged in August from July and were 2.4 per cent lower in August compared with a year earlier.
The income tracker report uses updated data on family expenditure and income from the Office for National Statistics Family Spending 2008 survey.
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