Consumer confidence hit as Asda income tracker falls for fifth month in a row
Asda Mums have budget concerns expecting family spending power to fall further
- £6 a week decrease in family spending power compared with the same month a year ago
- 2.6 per cent year on year decrease in discretionary income of average UK household
- Fifth consecutive month of decline in the Asda income tracker
- The cost of spending on essential goods and services continued to rise sharply, increasing by 5.1 per cent year on year in May
- 85 per cent of Asda Mums say a rise in VAT would have the most impact on their family finances
Just hours ahead of the emergency budget, data from the latest Asda Income Tracker showed the average UK family had £6 a week less disposable income this month than a year earlier, the biggest fall since the beginning of the year.
As a result, the average UK household had £210 a week of discretionary income in May 2010, down from £216 this time last year. The cost of living continued to rise at a fast pace, with a 3.4 per cent rise in inflation down from 3.7 per cent in April, putting further pressure on families. Fuel costs remained a concern, with a 10 per cent year on year increase in prices in May. On top of this, with regular pay increasing by 1.9 per cent year on year in the three months to April earnings growth remains below pre-recession levels.
With today’s emergency budget likely to signal even tougher times ahead, almost 85 per cent of Asda Mums said a rise in VAT would have the biggest impact on their family finances, with 60 per cent indicating a rise in national insurance would also be difficult.
Charles Davis, the economist at Cebr who compiles the report for Asda, said:
“Annual growth in average family spending power has been in negative territory for five months in succession. Households are facing the headwinds of above target levels of inflation and muted growth in regular pay. Looking forward inflation is likely to fall back over the course of the year, but the fiscal tightening announced in the budget means the labour market outlook is still weak. Hence, the outlook for disposable income growth remains challenging.”
Andy Clarke, Asda president and CEO, said:
“This month’s Asda Income Tracker really shows how tough customers are finding it out there, even before the emergency budget. There are clearly challenges ahead for ordinary families as the nation addresses the deficit.
“Nevertheless, the best businesses will view this as a call to action, not a time to wallow, whinge, or wonder when the recovery will appear, but a time to do what British business does best – find ingenious, sustainable ways to reduce costs so whatever tough measures are on the way, customers don’t notice a thing. Here at Asda, we’re ready to help customers save money everyday, by working even harder to reduce costs.”