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Family spending power decline eases, like inflation


As inflation slowed to four per cent last month UK family spending power fell by £10 per week, according to new research by supermarket Asda.

February’s Asda Income Tracker reported an £11 drop and the improvement in March marks the first time in 14 months that the level of decline was not greater than the month before.

Asda says that because the overall national inflation figure fell from 4.4 per cent to four per cent in the month, household finances did not decrease at the same speed as previous months despite gross income growth staying broadly unchanged month-on-month.

Charles Davis, Managing Economist at co-author of the report Cebr, said: “Falling food prices took away some of the pressure on household finances in March - though the rising cost of petrol and transport continues to place downward pressure on discretionary income.

“The latest labour market data shows a fall in unemployment. However, annual earnings growth remains subdued, standing at about half the rate of consumer price inflation.

“Unless household pay packets grow more strongly over the coming months, the Asda Income Tracker is likely to remain weak throughout much of 2011.”

Prices of fruit and bread & cereal fell by 4.7 per cent and 2.7 per cent respectively during the month according to the report, meaning essential goods price inflation dropped from 4.7 per cent in February to 4.4 per cent in March.

Large regional variants skew the picture however, with London seeing the smallest fall in spending power this year compared to Northern Ireland which has seen an annual drop of 11.9 per cent.

Andy Clarke, Asda President and CEO, commented: “The message to retailers is clear, keeping prices as low as possible can make a real difference to the money left over at the end of the month.”

Published on Tuesday 19 April by Editorial Assistant

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