Families '£9 worse off per week'

6:37am Saturday 19th July 2008

The average family is £9 a week worse off than a year ago as steep rises in the cost of living wipe out pay increases, figures show.

Despite average earnings rising by £22 a week during the past 12 months, the typical family had 6.5% less disposable income in June after meeting all their essential outgoings than they had a year earlier, according to supermarket group Asda.

Households had a monthly income of around £538 per week after paying tax during the month, 3.2% more than they had coming in during June last year.

But the rise in pay was more than wiped out by a 6.8% jump in the cost of essential goods, such as food, clothes, utility bills, housing and transport, with households spending around £407 on these items a week.

As a result people had just £131 of disposable income left after meeting all their bills, £9 less than in June 2007.

The research, which was carried out for Asda by the centre for economics and business research, found that the rise in spending on essentials was driven by a 9.5% jump in food prices, while transport costs have soared by 7.3% during the past year.

The typical family now also spends around 7% more on utility bills than they did in June last year.

Andy Bond, Asda chief executive, said: "Our latest report shows clear evidence of the squeeze on real disposable incomes.

"While average earnings before tax went up £22 a week over the year to June 2008, the average family was still £9 a week worse off. The cost of living has continued to rise sharply, although reductions in the basic rate of tax have helped to ease some of the pressure on families."

He added that the supermarket was beginning to see signs of people tightening their purse strings towards the end of the month, as they waited for their next pay packet.

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