UK families were £5 a week better off compared to the same month last year but confidence and spending among shoppers is still low, according to research by Asda.

Despite the increase in disposable income to £158 in January, 95% of mums said their standard of living is the same or worse than a year ago, according to Asda’s Mumdex.

Compared to two years ago, UK families still have £3 less each week.

Mums say the cost of living is three times as concerning as youth unemployment and four times as pressing as violent crime. Half of mums fear the UK economy will never be the same again.

Andy Clarke, president and chief executive of Asda said: “Families are continuing to look at ways to cut their spend and make their budgets go further. Nearly half of mums, for instance, are only part filling their cars with petrol, while many shoppers in our stores have told me that they are having to budget more than ever before.

“With 40% of Asda mums predicting that their quality of life and spending power may never return to pre-recession levels, it is crucial that the retail industry takes action and invests in keeping the cost of essentials down.”

The £5 increase in disposable income is the largest rise in five months and is driven by a fall in unemployment levels over the past 12 months, as the number of people in work rose to 29.7 million.

Asda said families are under pressure due to weak wage growth, housing costs including rental and energy prices, and food price inflation continue to put pressure on disposable income.

This has left families struggling to afford the basics like heating and using their cars, as well as cutting back on luxury items, such as holidays and electricals.

Charles Davis, head of macroeconomics at the Centre for Economic and Business Research said the outlook is bleak.

“Further public sector job losses are planned for 2013 and wage growth remains very low,” he said.

“In addition, inflation is likely to remain elevated, pushed up over the coming months by rises in the cost of housing and transport. The recent rise in oil prices is likely to put upward pressure on the cost of petrol in the coming months.”

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