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Disposable incomes 'hit new low'

 

Vicky Shaw
Thursday 24 May 2012 08:16 BST
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Families' disposable incomes are at their lowest since 2008, despite the decline in their spending power slowing, a report has said.

UK households had £144 a week of discretionary income in April on average, the lowest level since November 2008, the Asda Income Tracker found.

The study shows how families are feeling squeezed despite official figures showing this week that inflation fell to its lowest level in more than two years last month, as high street discounting eased some of the pressure on household budgets.

The Asda study said that families were £6 a week worse off than they were a year ago, although this was the smallest year-on-year decline since March 2011.

Growth in the cost of living slowed notably in April, to the lowest rate in 19 months, the report said.

But households' income growth was described as "still very fragile", with the improving cost of basic goods being overshadowed by tough labour market conditions with below-inflation wage increases and high unemployment.

The report warned that "family finances are likely to remain constrained for some time yet".

Despite some recent improvements in the cost of utilities and food, with energy providers making cuts to bills in March, they are still two of the main factors putting pressure on discretionary spend, the study found.

Electricity and gas charges were 8.1% and 15.4% higher respectively in April than 12 months previously, while food costs rose by 4.3% over the year.

Petrol and diesel prices were 4.9% and 4.2% higher in April than a year before, with the benefit of supermarket price cutting yet to kick in, the report said.

Family spending power is the amount remaining to spend on leisure and recreation after taxes and basic items are subtracted from budgets.

PA

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