August sees biggest squeeze on record as utility costs put pressure on disposable income
UK families £14 a week worse off in August 2011 than in 2010
- August saw a £14 a week fall in family spending power compared to the same month last year
- Average UK household had £162 a week of discretionary income in July 2011, 7.9 per cent lower than a year earlier
- Nine in ten (90 per cent) of people say things are tougher now than they were this time last year
- Asda customers say utilities and fuel costs are the biggest pressure on family disposable income
- Asda drops price of fuel by up to 2ppl from today
The latest Asda Income Tracker has revealed that family spending power fell by £14 a week in August 2011 – the biggest ever decline since records began in January 2007. The squeeze left the average UK family with £162 of weekly disposable income – 7.9 per cent down from this time last year.
Annual inflation on the consumer price index grew again to 4.5 per cent in August, up from 4.4 per cent in July – 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. Rising gas and electricity prices – following announcements from major utility suppliers – have started to feed through into the overall rate of inflation. In August, electricity prices were some 5.1 per cent higher than a year ago, while gas prices were 8.3 per cent higher.
Transport costs continue to put pressure on the inflation rate too, with the cost of getting around remaining the largest driver of the headline rate of CPI inflation. Figures from the AA show the cost of unleaded petrol grew by 16.5 per cent over the year to August while diesel prices increased by 17.4 per cent during the same period.
Asda’s own research* shows that its customers are noticing family budgets being squeezed from all sides. Its Pulse of the Nation Survey, carried out last Friday (23rd Sept) said;
- Almost four out of five (79 per cent) of people said the Government must take action now to put money back into people’s hands
- When asked what measures they’d like to see, two in five (39 per cent) a freeze on household energy bills topped the list of measures they’d like to see taken
- Over a quarter (26 per cent) said a cut in fuel duty would ease the cost of getting around
- Just under a quarter (24 per cent) stated a reduction in the standard rate of VAT from 20 per cent to 17.5 per cent would help balance their books
- And over one in ten (11 per cent) said a would prefer a one-off National Insurance rebate
Asda today [Tuesday 26th September] cut petrol prices by up to 2ppl immediately passing on a reduction in the cost of crude. This puts in place a national price cap across all its 188 petrol stations of 130.7 ppl for unleaded and 135.7 for diesel.
Asda remains the only fuel retailer to have a national fuel price cap and continues to urge others to follow its lead, delivering fairer prices across the whole of the UK and not just in places where an Asda keeps prices down.
Andy Clarke, Asda President and CEO, said: "It’s clear from this record drop in disposable income that British families have never had it so tough.
“Our customers are feeling the pinch – they’re clear they want more help to help make ends meet.”
Charles Davis Managing Economist, Cebr comments: “Rising unemployment has added further pressure to household finances in recent months, compounding the squeeze on spending power caused by high inflation and weak earnings growth.”
“The Asda Income Tracker shows that family spending power has fallen sharply compared with a year ago. With the UK economy in a particularly precarious state at the moment, things could get worse before they get better. However, inflation should fall back in 2012 and the Bank of England is unlikely to raise interest rates anytime soon given the weakness in the UK economy.”
You can read the full Income Tracker report on the Asda Press Centre.