Rising food and petrol prices meant that the average UK family has £5 a week less to spend than last year, according to grocer Asda’s first income tracker survey.
The figures, compiled by the Centre of Economics and Business Research, show that tax and essentials spend – covering areas such as on food, housing and transport – cost£27 a week more in January than the same month last year. However, the average weekly household earnings before tax went up just£22 a week last year.
Asda chief executive Andy Bond said: “The latest figures indicate that 2008 is going to be a tough year for customers and confirms what we've known for some time: that household budgets are being stretched to the limit.
“A combination of factors is pushing up the cost of living for millions of families, making it more important than ever for retailers like ourselves to keep prices as low as possible. Only that way will we keep a lid on inflation."
Separately, Asda said that it will be opening three further Asda Living stores at retail parks in Newport, Stratford-upon-Avon and Teesside this year, bringing its total to 16.