February's fall in family spending power enters double digits for the first time ever
Asda Income Tracker shows accelerated growth in cost of living is double the rise in earnings growth
- £11 a week fall in family spending power compared to the same month a year ago is the largest decline since the Income Tracker began
- It represents the 14th month of consecutive decline
- Average UK household had £169 a week of discretionary income in February 2011, 6.2 per cent lower than a year earlier
The latest Asda Income Tracker has revealed that in February 2011, family spending power fell by £11 per week, the largest fall on record and the third record breaking month in a row. The average family had £169 per week to spend in February, 6.2 per cent down from £180 this time last year.
The continued decline in family spending power in 2010 and into 2011 was the result of the price of essential goods and services rising faster than net income growth. Gross incomes grew by 2.2 per cent in January 2011 year-on-year, down from 2.4 per cent in January. Inflation on the consumer price index was at 4.4 per cent in February – notably up from the 4 per cent growth recorded in January and the highest rate of inflation since October 2008.
Rising global commodity prices have continued to soar in recent months, with ongoing disruption to oil supplies in the Middle East continues to put pressure on petrol costs in February. As a result, transport costs continued to be the largest contributor to the headline rate of inflation, contributing 1.3 per cent to the 4.4 per cent headline rate. Those factors which caused the Asda Income Tracker to fall in 2010 have persisted into 2011 and are likely to continue over the short term.
According to the AA, the cost of unleaded petrol rose 14.9 per cent between February 2010 and February 2011.
Charles Davis Managing Economist, Cebr comments:
“The rising cost of essential goods such as petrol and food stuffs continues to place pressure on households across the country –compounded by weak earnings growth and concerns about job security.
“The labour market recovery is still not yet convincing; public sector job losses this year–which appear to be occurring at a faster rate than the government initially expected –are likely to lead to a significant squeeze on the incomes of many households.
“Public sector workers still in employment will be affected by a two year freeze for those earning above £21,000, coming into effect from April”
Andy Clarke, Asda president and CEO, said:
“Asda Mums tell us it’s never been tougher out there, and they need our help more than ever to help them juggle the competing pressures on their finances.
“That’s why we’re keeping things simple by focusing on lowering our costs, investing in lowering prices where it matters most, and backing up our words with a cast iron 10 per cent Asda Price Guarantee to save them money on their weekly groceries.”