Family incomes drop to lowest level since 2008

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Families’ disposable incomes are at their lowest since 2008, although the decline in their spending power is slowing, a report concludes today.

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 that inflation fell to its lowest level in more than two years last month, as high street discounting eased the pressure on household budgets.

The Asda study said 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, and “family finances are likely to remain constrained for some time yet”.

Despite some recent improvements in the cost of utilities and food they are still two of the main factors putting pressure on discretionary spend, the study found.

Electricity and gas charges were 8.1 per cent and 15.4 per cent higher respectively in April than 12 months previously, while food costs rose by 4.3 per cent over the year. Petrol and diesel prices were 4.9 per cent and 4.2 per cent higher in April than a year before, with the benefit of supermarket price cutting yet to kick in.

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