Tough Times For Families Still Ahead
by Patricia Montgomery, LincsMag Writer.
Date: 07 August 2010
According to a recent report from one of the nations leading supermarkets, the average UK family was £7 a week worse off in June 2010 compared to a year earlier. This represents the biggest fall in disposable income available to families since the beginning of the year. As a result, the average UK household had £171 a week of discretionary income in May 2010, down from £178 this time last year.
This picture is supported by the nationwide poll conducted by Asda, where almost 40pc of people are prepared to take a pay cut to avoid unemployment and 1 in 8 concerned about losing their jobs. Only 34pc of people currently feel secure in their existing role. Indeed, despite this month’s positive data unemployment is expected to edge up over the medium term in the face of public sector job shedding.
As well as insecurities around jobs the cost of living has continued to rise at an elevated pace, with inflation levels, at 3.2 per cent in June, above the limit of the Bank of England’s target for the sixth month in succession. While regular pay had increased by 1.8 per cent in the three months to May year on year – significantly below pre-recession levels.
The main factors putting downward pressure on family spending power in June included the transport category, which saw the largest year on year increase, up 8.9 per cent in June. Utility bills also edged up relative to last year for the third month in succession, rising 0.5 per cent in June, after a 0.6 per cent increase in May. Mortgage interest repayments in June were up 4.6 per cent annually, as in May.
The only broad area of spending on the consumer price index, which has given a boost to household’s discretionary income when compared to a year ago, was the cost of clothing and footwear, which was 1.4 per cent lower in June than a year ago. This is far below long run average levels, as clothing and footwear has decreased on average by 4.6 per cent annually over the June 1993 to June 2010 period.
The Asda Income Tracker reveals that discretionary income has fallen by 4.2 per cent in June year-on-year. Despite reductions in official unemployment figures and an easing of inflation, annual growth in earnings remains weak while the cost of many essentials continue to rise.
Charles Davis, the economist at Cebr who compiles the report for Asda, said: "The bottom line is that real family spending power has continued to fall and the outlook continues to look tough for households.”
Andy Clarke, Asda CEO, said: "Our customers are telling us that not only do they have less money, but many are worried about their job security, and can’t see their finances improving for some time."
"That’s why it’s really important we do everything we can to help lessen the blow.
"We’re ready for the challenge – and will do everything in our power to ensure families don’t pay a penny more than they need to for the things they need most."
