There was a year-on-year decline in the Asda income tracker of 2.5% in July 2010, with a £5 a week decrease in family spending power compared with the same month in 2009, according to a new Asda report.
The average family had £175 per week to spend in July, down from £180 this time last year. An increase in price inflation was the single largest contributor, while annual growth in regular earnings eased over the three months to June to 1.6%, from 1.8% in the three months to May.
The main factors putting downward pressure on family spending power in July included food and non-alcoholic drinks, which contributed 0.4 percentage points to the overall inflation rate. The most significant factor came from fuels and lubricants as prices rose 14.3% over the 12 months to July. Price inflation and transport contributed 1.3 percentage points of the 3.1% overall inflation rate. With 5.2% annual growth, mortgage costs have continued to edge up in July – the fourth month in a row that mortgage costs have been higher than the previous year.
The only area of spending which has helped with household’s discretionary income was clothing and footwear, which decreased 3.1% over the year to July, compared to 1.4% in June. While electricity, gas and other fuels were 1.9% down over the year to July, other housing costs rose robustly over the same period.
Charles Davis, the economist at Cebr who compiles the report for Asda, said: “Inflation remains elevated however, while annual growth in regular earnings eased over the three months to June to 1.6% from 1.8% in the three months to May. The labour market recovery appears to be weak, with public and private sector employment sluggish.”
Andy Clarke, Asda CEO, said: “The latest figures back up what we forecasted earlier in the week, these are increasingly uncertain times for millions of families across the UK, and our customers will need us more than ever.
“We’re shopkeepers not economists, but in this ‘age of austerity’ we know the pennywise will thrive. Our stimulus package for the economy starts with saving our customers money every time they shop – real money that can be saved, or spent elsewhere.”
Source: Asda
