Families Â£9 a week better off than a year ago according to ASDA income tracker
- 6.2% year on year increase in discretionary income of average UK household
- 45.5% year on year decrease in mortgage interest payments
- Food and drink inflation at its lowest since September 2007
The average UK family is £9 a week better off compared to July 2008 as the Bank of England keeps interest rates on hold at a record low of 0.5 per cent. As a result, the average household had £163 a week of discretionary income in July 2009, 6.2 per cent higher than a year earlier.
The year on year rises in the tracker are largely due to comparison with a period in which prices were rising very quickly across the economy.
Food and drink inflation is now at its lowest since September 2007, however transport costs have risen for six months in succession as petrol prices hit their highest level since January.
According to the latest Income Tracker report gross income rose by £7 a week in July 2009 compared with a year earlier. After tax, average family incomes rose by £4 a week in July 2009 relative to a year earlier. However, inflation held steady on the consumer price index, with prices flat in the month.
Andy Bond, ASDA president and CEO welcomed the increase in household income, but warned people may be reluctant to spend it. He said: "This is obviously a positive trend for consumers who have been feeling the pinch in the credit crunch. As we’ve seen over the past year, even a small movement in discretionary spend can make a big difference to a household budget.
However, how people choose to spend their money is still dictated by sentiment, and consumers remain fundamentally cautious about the future. Despite households now being £9 a week better off, these continue to be challenging times. It is not going to be a straight line to economic recovery.”
Charles Davis, an economist at Cebr who compiles the report for ASDA, said: “In July, the Asda income tracker shows average families are £9 a week better off than a year ago”
“Inflation is expected to fall further as the economy runs below capacity, boosting spending power. However, spending power could also come under some pressure from the global economic recovery pushing commodity prices higher and the weak labour market outlook.”
Mortgage interest payments stood 45.5 per cent lower in July 2009 compared with a year ago- as the Bank of England keeps interest rates on hold at the record low of 0.5 per cent. Overall essential spending was £5 a week lower in July 2009 compared with a year earlier. Spending power for discretionary items was £9 a week higher in July 2009 relative to July 2008.
Inflation on household utilities remains high, with gas bills 22.7 per cent higher than a year earlier and electricity 6.8 per cent higher. Households were helped by a 0.4 per cent month on month decline in food and non alcoholic drink prices; annual food inflation is now at it’s lowest since September 2007. In addition, discounting of clothing and footwear caused prices to fall by 3.2 per cent in in July from June, to stand 8.1 per cent lower than a year earlier.
Please contact the ASDA press office if you’d like a copy of the full report accompanying this release.
Family spending power is the amount remaining after the average UK household has had taxes subtracted from income and bought its basic items. It is the amount left to spend on leisure and recreation goods and services; these are listed in the appendix of the report.
A spending power indicator for the average UK household is provided on a monthly basis.
On a quarterly basis we provide the following additional spending power indicators:
- Regional spending power indicators
- Income band spending power indicators
- Occupational spending power indicators
- Household type spending power indicators
ASDA spending indicators are based on regional, income band, socioeconomic and household type desegregations using the family spending survey.
This report has been produced by the Centre for Economics and Business Research (cebr), an independent economics and business research consultancy established in 1993 providing forecasts and advice to City institutions, government departments, local authorities and numerous blue chip companies throughout Europe. The contributors to this report are Charles Davis and Douglas McWilliams.
We use official data to provide an up to date and accurate measure of spending power. From April 2009, the income tracker is based on updated official base data on family expenditure and income from the Office for National Statistics Family Spending 2008 survey; making it not directly comparable with previous versions –but up to date as possible with the latest data.