Inflation hit families in run-up to Christmas says Asda

HIGH inflation hit families in the run-up to Christmas, according to Asda's latest Income Tracker.

The Leeds-based supermarket giant said the average British family had 6 a week less to spend in November compared with a year ago.

This marks the eleventh month of falling household spending power, with household discretionary income down 3.4 per cent on November 2009.

The average family had 174 per week to spend in November, down from 180 this time last year.

Asda's president and chief executive, Andy Clarke, said: "2010 has shaped up to be a challenging year for families up and down the country.

"According to the latest income tracker, this is the eleventh month of consecutive decline in disposable income.

"As we approach the New Year and the imminent VAT increase, family spending power is going to remain under considerable pressure."

He added: "That's why we've pledged to do everything we can to ensure our customers don't notice a thing."

Asda said the continued decline in family spending power in 2010 was due to the price of essential goods and services rising faster than net income growth.

The rise in inflation has been blamed on the depreciation of sterling, rising global commodity prices and the VAT increase in January 2010.

There were also signs that the stabilisation of the labour market may have faltered. During the recession, many workers transferred to part-time or self employed jobs, so there is still a degree of capacity slack for businesses to soak up before hiring new workers.

Charles Davis, the economist at Cebr who compiles the report for Asda, said: "Inflation remains stubbornly high, with commodity process putting upward pressure on the cost of living.

"Meanwhile the labour market recovery is not yet convincing. So for many households growth in income has once again failed to keep up with the rising cost of essentials."

Asda said the main factor putting downward pressure on family spending power in November was transport, which remained the single most important element of consumer price inflation. According to the AA, the cost of unleaded petrol rose 9.6 per cent between November 2009 and November 2010.

Asda has 374 stores, including 25 Asda Living stores, 23 depots and eight recycling centres across the UK.