Families’ spending power has reached its lowest level since March according to the latest Asda income tracker.
Although household incomes rose by 3.8% over the past year, rising housing, energy and transport costs meant that spending power in real terms increased by just 2.4%, it found.
Asda said the financial squeeze was being felt the most by low-income households, who now spend £76 a week more on essentials than they earn.
More than 90% of income for households in the second-lowest income group is now spent on essentials, leaving just £11 a week for discretionary spending.
However, middle-income families were also hard hit and were only 58p a week better off than a year ago.
“Every pound saved on the weekly shop matters when budgets are stretched. With household bills continuing to put pressure on family finances and customers already planning ahead for Christmas, we’re focused on helping them make their money go further,” said Asda chief customer and digital officer Rachel Eyre,
”That’s why we’ve cut the price of 1,000 products and are holding those prices until after Christmas, helping customers get great value every time they shop with us.”
Sam Miley, head of forecasting and thought leadership at Cebr, which conducts the survey, said: “Pressure on household finances looks set to persist. A higher energy price cap and dearer fuel will keep essential costs rising at an elevated rate, while cautious hiring by employers limits any offsetting boost to incomes.
”Rising core inflation also suggests that higher energy costs are increasingly feeding through to prices across the wider economy.”
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