ASDAâ€™s monthly income tracker shows household disposable income improving but more likely to be saved than spent in the new year
The average UK family is £7 a week worse off relative to November 2007 – an improvement of £4 from its lowest point in September.
The average UK household had £135 a week to spend on recreation in November, 5.1 per cent lower than a year ago, but the highest since the £136 a week income tracker recorded in May.
A sharp drop in the cost of fuel helped reduce the burden of the cost of living. Petrol prices fell by 9.3 pence per litre in November, as overall transport costs fell by 2.6 per cent.
~Please contact the Press Office on 0113 2417829 for a copy of our Income Tracker.
In addition, Asda’s Pulse of the Nation* asked ASDA customers, “If your household’s disposable income increases in 2009, will you spend or save the extra?” – just over 70% of the respondents said they would save but also use extra income to pay off debts.
Andy Bond, ASDA CEO and President, “There is some good news for families as inflation falls and disposable incomes increase but the mood of the nation is that cutting back on conspicuous spending , being more frugal and an increased savings mentality will be a priority for most families in 2009”
With the value added tax (VAT) cut from 17.5 per cent to 15.0 per cent announced at the end of November – causing a reduction in prices across the board in December – we can expect a further improvement in disposable income.
Cebr expects inflation to fall sharply over the next few months, with negative year-on-year inflation a distinct possibility in 2009 as steep drops in global commodity prices work their way through to shopping bills. This will further ease the cost of living pressures on family finances.
One factor that could limit the extent of the drop in inflation is the steep fall in the value of sterling. On a trade weighted basket of currencies, the pound has lost more than a fifth (21 per cent) of its value since the beginning of the year. This means the price in pounds of imported goods will rise. The United Kingdom imported £347 billion worth of goods and services over the first three quarters of 2008 and imports account for 31 per cent of gross domestic product, so this is an important consideration.
Charles Davis cebr economist, ‘The Asda income tracker shows that the pressures on average UK family budgets were eased by another significant fall in inflation in November. The VAT cut and collapsing global commodity prices will further reduce the cost of living for UK families providing some festive cheer.’