Family spending power fell for the tenth month in a row in October, according to the latest Asda Income Tracker.
The index, which is compiled for the grocer by the Centre for Economics and Business Research (Cebr), showed that families had £4 less to spend during the month compared to October 2009.
Gross incomes were 2.2 per cent higher over the three-month period to September but this figure failed to keep pace with the cost of essential goods and services, which increased by 3.3 per cent year-on-year.
Asda’s tracker also showed that the average family had £176 per week to spend in October, with the 12 per cent annual growth in petrol prices one of the main factors putting downward pressure on spending power.
Charles Davis, the economist at Cebr who compiles the report for Asda, said: “The Bank of England’s November Inflation Report shares our view of inflation remaining above target for the whole of 2011.
“Sterling’s past depreciation continues to feed through to consumer prices. This is being compounded by rising commodity prices, due to supply side shocks and demand from emerging economies.
“Looking forward, the VAT hike to 20 per cent in January will add further pressure on household budgets in 2011, as will news of price hikes in the utilities sector of up to seven per cent in December.”
Andy Clarke, Asda President and CEO, added: “In this environment UK businesses are acutely aware of their responsibilities to keep a lid on costs to enable them to ease the burden on customers.”