Families face tough times as spending power remains flat

Families are continuing to face tough times with spending power remaining flat compared to this time last year, our Income Tracker research has found.

The latest Income Tracker report reveals that the average family has just £150 of weekly disposable income – the same level as in June 2011 but £7 a week lower than in June 2010.

But there was some good news – June 2012 was the first month since September 2010 that disposable income did not fall year-on-year since September 2010.

Falling inflation on food, clothing and transport is easing the pressure on family budgets. Annual CPI inflation fell for the third month in a row in June, taking it to its lowest level since November 2009.

However, high unemployment and slow pay growth means that disposable income is still significantly lower than two years ago.

Disposable income is doing better in some areas of the UK than others. Families in the South West saw the greatest annual increase in spending power – up 1% over the year. But disposable income in Yorkshire and the Humber was down 2.7% year-on-year amid rising unemployment in the region.

There is a growing divide between northern and southern parts of the UK – a London family’s average disposable income is more than twice as high as a family in the North East and more than three times that of a family in Northern Ireland.

Andy Clarke, Asda president and CEO, said: “Families are no better off than a year ago and still £7 a week worse off over two years. Our customers tell us it still feels tough out there, and with the kids starting to break up for the summer holidays mums are going to need all the help they can get to balance the books.”

Charles Davies, head of macroeconomics at the Centre for Economics and Business Research which produced the Income Tracker report, said: "The latest movement in the Asda Income Tracker is good news for UK families, as households see an end for now to falling incomes.

“However, while the latest data showed falling unemployment, more forward-looking indicators suggest further tough times ahead. With public sector cutbacks continuing to bite and businesses lacking the confidence to create new jobs, unemployment looks set to remain elevated.”