Rising unemployment and weak wage growth erodes family spending power
£1 a week fall in discretionary household income for UK families last month says Asda Income Tracker – the first decline in 12 months
- The average UK family had £152 a week of discretionary income in March 2013, down £1 a week from the same month last year and £7 a week from March 2011
- Rising unemployment and the lowest regular wage growth on record were both key factors in the fall in family spending power in March
- Soaring energy prices continue to squeeze household budgets, with the price of gas up 7.6% year-on-year
- Good news for households in the North East however, with discretionary income rising by over £1 a week to £128 – the fastest annual growth in the UK
The latest Asda Income Tracker has revealed that family spending power fell by £1 a week year on year in March 2013 – driven by a sharp increase in unemployment and the weakest wage growth on record.
According to the latest figures, released today (Friday 19th April), the average UK family had £152 of weekly discretionary income available to them in March 2013, 0.7% down from the same time last year – reversing 12 months of growth. UK families were £7 a week worse off in March 2013 compared to the same month two years ago.
A weak increase in the average UK wage was the primary driver behind this fall, with average pay up just 1% over the year to February. This was a third of the rate of essential item inflation (3%) and the lowest rise on record since the Office for National Statistics began collecting comparable figures in 2001.
Unemployment in the UK also jumped 70,000 over the last quarter to 2.56 million, pushing the jobless rate up to 7.9% – the largest rise since the summer of 2012. According to the most recent figures, over 90,000 people have now been out of work for more than a year, an 8,000 increase on the previous quarter, while the number of unemployed 16 to 24-year-olds rose by 20,000 to almost one million.
On a positive note, fuel has seen lower levels of inflation than previous months – with prices up just 0.1% compared to the same time last year. However annual inflation on utilities such as electricity and gas remains stubbornly high, with both standing at 7.6%.
Across the regions, there was good news for households in the North East with discretionary income rising to £128 – the fastest annual growth in the UK, at 3.6%. However, many other parts of the country continued to suffer a fall in spending power over the first three months of the year.
This was particularly the case for families in Northern Ireland, where the Income Tracker fell by 11.5% year-on-year to £54, reflecting a substantial increase in unemployment in the region, which now stands at 8.4%. The West Midlands and the South East also saw annual declines in discretionary income this quarter, which were 1.8% and 2.2% respectively.
The disparity between London and the rest of the UK also remained evident in March 2013. Families in the capital had £228 of weekly discretionary income available in the first quarter of the year – significantly more than Northern Ireland (£54), Scotland (£158), Wales (£143) and the UK average (£154).
Asda president and CEO Andy Clarke said: “Over the last few months we’ve seen a gradual improvement in the income tracker, but the latest figures shows that we are far from out of the woods.
“The recent cold snap has clearly impacted household utility bills; with the recent change in weather hopefully this will help to ease some of this pressure.
“In this tough environment we are holding down the price of essentials – like bread and eggs – and, coupled with our recent lead on lowering petrol prices, we continue to work hard to help families balance their books”.
Rob Habron, Economist at CEBR said: "This month’s annual decline in the Asda Income Tracker highlights the tough conditions being faced by UK households, as pay growth slows and the cost of living rises at 3.0% year on year.
“Moreover, the outlook for family finances 2013 remains fragile. High unemployment and weak pay increases are likely to continue as economic growth remains slow, while inflation looks set to remain elevated for much of the year.”