Families face pain at the petrol pumps as inflation hits two-year high

Petrol prices are rising, according to Asda's income tracker
Petrol prices are rising, according to Asda's income tracker
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MANY BRITONS could start to feel the pinch in 2017, as rising petrol prices place a greater strain on family finances, according to a new survey.

Leeds-based Asda’s income tracker found that petrol prices increased by 7.4 per cent year-on-year in November, while·inflation hit a two year high of 1.2 per cent.

Disposable income grew by 4.5 per cent year-on-year in November, leaving families with £202 per week, the income tracker found. This is the third consecutive month of single digit growth.

An Asda spokesman said that the cost of fuel was one of the main contributors to the slowdown, with petrol hitting its highest price since July 2015 last month, which was due to the weakened pound and the global increase in fuel prices.

The spokesman added: “The recent upward trend seen in the consumer price index continued into November. Inflation reached a two year high of 1.2 per cent in November, up 0.3 percentage points compared with October. This has been attributed to clothing and fuel costs, along with various service increases, including utilities, restaurant visits and hotel stays.

“The figures demonstrate that the positive progress that UK families have experienced over the last two years is now slowing, as the downward trend of discretionary income is no longer being treated as a blip by analysts.”

Kay Neufeld, an economist from Cebr - the Centre for Economics and Business Research - said: “After three months of falling growth rates there is no doubt that households’ discretionary income growth is on a downward trajectory. Rising prices for petrol and several services are eating into families’ budgets. Prices for communication, health care and also for staying in hotels or eating in restaurants, have all increased year-on-year in November.

“Households’ weekly spending power is still increasing, but this might not be the case in 2017. The greatest danger stems from rising inflation paired with a flailing labour market. While wage growth has accelerated in the latest readings, employment growth has slowed and the claimant count is rising. An economic slowdown in 2017 could put additional pressure on the labour market.”