The cost of living in the UK rose 7.4 per cent in August, leaving the average family £11 worse off a week, according to Asda’s income tracker.

It found that the average UK household had£132 a week left after tax and essential spending, yet another indicator of the drop in disposable income. Family spend on essential goods soared 5.5 per cent in the month, with continued increases in food prices and energy bills.

As inflation reached 4.7 per cent, August recorded the largest fall in Asda’s income tracker for the year to date.

Asda chief executive Andy Bond said that, despite a tough climate, he was hopeful of light at the end of the tunnel. “Food price inflation has peaked and with our latest price cuts we have thrown down the gauntlet to the rest of the industry to act,” he said. “With Christmas looming, family budgets will be stretched and it is our job to help them to make ends meet with long term price cuts.”