Asda income tracker shows families £11 better off than a year ago
- 7.5% year on year increase in discretionary income of average UK household
- Typical UK household has £162 a week discretionary income
- However, the labour market remains weak and the outlook is more challenging
The average UK family is £11 a week better off than in September 2008, the largest year on year rise in the Asda income tracker since June this year. As a result, the average UK household had £162 a week of discretionary income in September 2009, 7.5 per cent higher than the same month last year.
Annual inflation on food and non-alcoholic beverages is now at its lowest since May 2006 whilst the cost of utility bills fell over the year for the first time since comparable records began in 1988. Electricity prices fell by 7.2 per cent over the year to September and gas prices fell by 5.6 per cent.
Despite the drop in energy costs, research from Asda’s Pulse of the Nation survey has revealed that its customers are still concerned about the cost of heating their homes this winter. More than 60 per cent of those surveyed said they were not turning their heating on as much during the day, and more than 40 per cent were saving money by heating fewer rooms.
Charles Davis, a senior economist at Cebr who compiles the report for Asda, said: "In September, the Asda income tracker rose by the largest amount since June as reduced mortgage and utility bills lowered the cost of household essentials compared to last year.
“However, the labour market remains weak and households are using the low interest rate environment to pay off debt so a consumer spending led recovery is not on the cards. Furthermore, with significant cuts expected in the public sector to reduce the budget deficit, the outlook will be more challenging.”
Asda boss Andy Bond welcomed the continued increase in household income, but warned that this month may mark the peak rise in the income tracker. He said: "Although the increase in spending power is welcome, the spike in income this month is in part due to base effects from a year earlier. “Unfortunately, we expect this month to mark the peak rise in income, with weak earnings growth and we start to compare against last year’s interest rate reductions.”
Mortgage interest payments are 45.6 per cent lower in September compared with a year earlier. The fall in mortgage costs is largely due to comparing with a month in which Bank of England rates were still at 5.0 per cent
Andy Bond added: “Despite energy costs falling our customers tell us they are worried about paying their heating bills this winter. I’d encourage people to consider switching suppliers to ensure they are taking advantage of falling prices.”
By switching your gas and electricity supplier with Asda Energy Switch and Save customers can save an average of £163 a year.
Despite earnings growth remaining relatively low, average family incomes rose by £2 a week compared to this time last year, giving families a much needed boost ahead of Christmas. Data from the Office of National Statistics revealed that average earnings including bonuses increased by 1.6 per cent over the three month period to August compared with the same period a year earlier.
Growth fell back for the second consecutive month and is down from 3.5 per cent a year ago. Public sector earnings grew by 3.2 per cent year on year compared with 1.2 per cent growth in the private sector.