Last updated at 14:46, Friday, 30 March 2012

Families are £10 a week worse off than they were a year ago and face a third year of incomes being eroded, according to research by a supermarket chain.

The Asda Income Tracker report said that after five months of improvements in incomes year-on-year, its February results showed a “marginal reversal” of the trend.

The typical UK household had £144 a week of disposable income in February, with the decrease largely due to “fragility in the UK labour market”, the report said.

Consumers are being “squeezed in both directions” by weak income growth standing at just 1.7 per cent during the three months to January, the slowest pace in 18 months, and high inflation keeping the cost of basic goods up. The study said unemployment was likely to continue to act as a drag on household finances and, despite some recent improvements in the cost of utilities and transport, they remain two of the main factors putting pressure on families’ spending power.

Charles Davis, managing economist at the Centre for Economics and Business Research (Cebr), which produces the report, said: “While inflation is likely to fall further over the coming months, resulting in smaller declines on the Asda Income Tracker, weakness is expected to remain in the UK labour market for some time and earnings growth to be only slow over the coming year.

“As a result, real income erosions are likely to continue for a third year in 2012.”

The study said the cost of transport remains a “major factor” placing pressure on family budgets. Petrol and diesel prices rose by 4.2 per cent and 4.7 per cent respectively over the last year. These may increase further after recent oil price rises, the report warned.

Andy Clarke, Asda president and chief executive, said: “It’s disappointing to see a reverse in improvements to the cost of basics seen in previous months, putting a further pressure on already squeezed family budgets.”

First published at 14:09, Friday, 30 March 2012
Published by http://www.cumberlandnews.co.uk