Family spending powers ‘on the slide’

Families have suffered the worst deterioration in their spending power in 12 months, driven by a sharp decline in wage growth, according to a report.

Households had £155 a week of discretionary income in April, marking two months of annual declines in a row Asda’s latest income tracker found.

The recent worsening trend follows a series of improvements to people’s finances which had been recorded over the last year.

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Families are now £1 a week worse off than the same month last year and have £10 a week less than they did during a peak in February 2010, said the report for the Centre for Economics and Business Research.

Weak income growth was the “primary driver” behind people’s budgets taking a turn for the worse, with wage growth falling at the fastest rate since the start of the economic crisis, the report said.

Employment prospects have weakened and average pay rose to just 0.8 per cent over the year to April, marking the lowest rise since comparable figures began in 2001. The cost of utilities such as electricity and gas was also a strong factor behind the decline in people’s budgets.

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