Inflation combined with widespread freezes on pay has led to a record fall in the average family’s spending power, new data suggests.
UK families have £8 a week less discretionary income than this time last year, according to Asda’s monthly Income Tracker.
The average family now has £172 a week to spend on non-essential items, down from £180 in January 2010. The dip represents the biggest monthly fall since Asda launched the tracker, which is compiled by the Centre for Economics & Business Research, in January 2007.
CEBR economist Charles Davis described 2010 as “a tough year for the consumer” as prices rose quicker than wages.
“The elevated level of inflation in 2010 was mainly driven by the VAT increase in January 2010 and external factors driving up commodity prices,” he said.
“The VAT increase in January 2011 will keep inflation elevated this year, while public sector cuts will start in earnest [meaning] wage growth will remain modest.”
Asda chief executive Andy Clarke (pictured) added: “It's our job though to work with our suppliers to reduce costs and keep our prices as low as possible.
“Since the turn of the year we've seen a seven fold increase in shoppers comparing the price of their groceries online. Our guarantee to be at least 10pc cheaper than other supermarkets or we will refund the difference means we're helping British families out when they need it most.”
Are wages rising in the grocery sector? Find out with The Grocer's 2011 Salary Survey.
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