UK families were £11 a week worse off in July 2011 than they were this time last year
- July saw a £11 a week fall in family spending power compared to the same month last year
- Average UK household had £166 a week of discretionary income in July 2011, 6.4 per cent lower than a year earlier
- Asda customers half filling petrol tanks to increase fuel efficiency
The latest Asda Income Tracker has revealed that family spending power fell by £11 a week in July 2011, leaving the average UK family with £166 in disposable income – 6.4 per cent down from this time last year.
Annual inflation on the consumer price index grew again to 4.4 per cent in July, up from 4.2 per cent in June – continuing to soar well above income growth and placing significant pressure on household spending power. Conditions in the labour market worsened this month and this is likely to continue into 2012 as public sector cuts start to take effect.
Family budgets are squeezed further by the rising costs of basics. Transport costs continue to be the biggest factor with the cost of getting around up to 16.5 per cent higher in July 2011 than it was year ago according to the AA. And it’s not just the cost of filling the car that’s rising, food prices continue to put pressure on the inflation rate too, still contributing a large amount to the headline rate despite annual food price inflation easing marginally in July.
Although average earnings increased marginally faster over the year to July, recruiting conditions remained constrained. Pay growth continues at a faster pace in the services sector, at 2.6 per cent over the period, than manufacturing at just 1.1 per cent.
Asda’s own research shows that customers are adapting to family budgets being squeezed from all sides. A survey conducted on the retailer’s Facebook page earlier this week indicated that customers were buying into own brand ranges, using Asda.com to compile a list that fits within their budget and then taking it into stores to shop with; half-filling petrol tanks to avoid wasting money driving with a full tank and cutting their own hair instead of visiting the hairdressers.
In addition, as thousands of students receive their GCSE results this week, Asda has reported a dramatic increase in interest in its apprenticeship programme, with over 4,000 young people signing up to train for GCSE and A Level equivalent qualifications in the last three months.
The retailer also saw a 50 per cent year-on-year increase in new applications for apprenticeships, as young people look for alternate routes to training and development after leaving school.
Andy Clarke, Asda President and CEO, said: "The Income Tracker spells out how tough family finances are right now. The maths is simple – the rising cost of feeding the family, getting around and increasing unemployment add up to the biggest squeeze on families since before the last recession.
“We’re in a unique position to help kick start the economy. At Asda we’re tightening our belts, holding down the price of food and fuel and offering a future to the thousands of young people that shouldn’t be forced to choose between their desire to learn and need to earn.”
Charles Davis Managing Economist, Cebr comments: “Pressure on household finances continued to mount up in July as the cost of essential spending grows rapidly while wage increases remain slow. Price growth in transport, food, and alcohol & tobacco was strong over the year to July.
“The Asda Income Tracker shows that family spending power continues to fall from a year ago. With larger-than-usual rail fare increases allowed for next year and utility price rises set to come in over the coming months, the UK consumer still faces tough times ahead.”
You can download the full report here