Families £8 a week worse off
The Asda Income Tracker shows that consumers’ discretionary income in December was £8 a week lower than in the previous December. This is the worst annual fall since Asda and the Centre for Economics and Business Research began producing these figures in March 2008.
Discretionary income – “spending power” in the report – is the income families have after paying taxes and “living costs” (food, clothing, housing costs, bills, transport, communication costs, health, children’s schooling, house maintenance and repair). The average UK household’s £172 a week is £8 – 4.5 per cent – lower than at the end of 2009.
Discretionary income was lower than it had been 12 months earlier in every month of 2010, underlining the fact that low household incomes characterise the under-powered economic recovery. This is unlikely to improve in the near future; as Charles Davis, economist at CEBR commented:
The VAT increase in January 2011 will keep inflation elevated this year, while public sector cuts will start in earnest. As such wage growth will remain modest. This is likely to result in lower levels of disposable income in real terms for families in 2011 compared to 2010.