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Disposable household income flat for UK families says Asda Income Tracker

The average UK family had £160 of weekly disposable income in June 2013, £5 a week more than the same month two years ago, according to figure released by Asda in its Income Tracker.

GENERAL MERCHANDISE

Disposable household income flat for UK families says Asda Income Tracker

However, the figure remained well below the peak of £165 seen in February 2010, the supermarket said.

A weak increase in the average UK wage was a key factor behind the stagnation in discretionary spending power, with average pay excluding bonuses up just 1% in the three months to May. This was a third of the rate of essential item inflation (3%).

Had it not been for the April rise in the income tax-free allowance – from £8,105 to £9,440 – household disposable income would have fallen even further, by an additional £5 a week.

The continued rise in inflation of essential items, up 0.1 percentage points to 3.0%, also added to the squeeze on household finances. The cost of gas and electricity, for example, rose 8.3% and 7.7% respectively, compared with a year ago, while clothing prices increased by 3.1%.

Asda president and CEO Andy Clarke said: “Although customers don’t seem to be any better off than they were this time last year, a positive rise in retail sales indicates a return to cautious spending.

“It is unlikely that consumer confidence will be fully restored until we see a significant improvement in family finances, but the good news is that the cash in our customer’s pockets appears to be stabilising.

“With the recent heatwave and two British sporting victories in the bag consumer spirits are high, hopefully leading to a brighter outlook for July.”

Rob Habron, economist at CEBR added: "Although green shoots are emerging for the UK economy, with growth looking to have continued across Q2 2013, the economic environment remains tough for households.

“With the pace of income increases remaining below growth in the cost of living, the squeeze on household finances is ongoing. Strong price rises are still being seen in essential items such as utilities and clothing, while petrol prices are now putting further pressure on family spending power.”

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