Family spending power rose very slightly last month compared to a year earlier as disposable incomes continue to improve, figures released today reveal.
Compared to August 2011, British families were £2 a week better off, with £149 a week in discretionary income, an increase of 1.4 per cent.
This represents the third consecutive annual increase in the Asda Income Tracker and more than one increase in a row has not been seen for two years, driven by a fall in clothing inflation and fuel prices which eased pressure on family budgets.
However, the elevated unemployment rate, which climbed to 8.1 per cent in the three months to July 2012 despite a 0.1 per cent decrease on the quarter and the index noted that the results may not be as positive as helped.
When put into context over two years, families remain £9 a week down on disposable income available in 2010 as slow pay growth and the fragility of the economic climate diminish growth and create consumer uncertainty.
Andy Clarke, Asda President and CEO, believes that the figures highlight the unpredictable nature of the current economic situation.
“The good news continues for UK families for now at least – with more cash in their pockets than a year ago,” he said.
“However there’s no doubt that budgets are still under pressure with the two-year view showing a worsening picture.
“Families are still cautious – they know that running a home in winter costs more, and have real concerns about maintaining their standard of living for the rest of 2012.
“We are committed to holding down the cost of the basics – particularly food and fuel – to help customers stretch their budgets that little bit further.”
Electricity and gas bills remained unchanged last month though it is expected that inflation will be elevated in the coming months as bills are scheduled to rise, putting upward pressure on the inflation rate in the same way that petrol and diesel cost increases did in July and August.
Rob Harbron, an Economist at Cebr, said that the latest results will be welcome news for UK households as easing conditions drive annual improvements on the tracker.
However, Harbron warned: “Despite this, risks ahead still remain. Utility companies have announced price hikes for later in the year, while the rising cost of crude oil is likely to push petrol prices up again in the coming months.
“At the same time, economic conditions remain uncertain, keeping pay growth subdued.”