Family spending power improved “very slightly” in July, with a second consecutive, albeit marginal, annual increase in the Asda Income Tracker.
More than one increase in a row has not happened since March 2010. According to the latest figures the average UK family had £151 of weekly disposable income available to them in July 2012.
The slight improvement in disposable income recorded for July 2012 is driven by easing inflation on family budgets – with food, clothing and transport inflation all falling over the month. The unemployment rate also fell to 8.0% during the three months to June 2012 – a decrease of 0.2 percentage points on the quarter and the lowest rate since June 2011.
This month’s annual increase in discretionary incomes follows a general improving trend from September last year. Income erosions have been shrinking since then as price inflation for essential items has fallen back. But despite the lessening impact of inflation on household budgets, when the month is put in context over two years UK families are still £8 a week down on disposable income available in 2010 – budgets are stripped bare.
Slow pay growth and a fragile economic outlook continues to hold back income and create concerns for families as the UK economy languishes in recession. Increased price pressures from the cost of food and fuel could emerge in future months, as crude oil and food commodity prices rose in July.
Asda president and CEO Andy Clarke, said: “At last this is a bit of light at the end of the tunnel for UK families – with the first improvement in disposable income for over two years.
“However customers still have less in their pockets this month than they did two years ago – there’s no doubt that balancing the books is still a challenge.
“Despite an improved picture families have very real worries about unemployment and the fragility of the wider economic situation. It’s still tough out there.”