Family spending power was flat in October as a steep decline in inflation on essential items was offset by weak income growth, according to the monthly Asda Income Tracker.
The average UK family had £158 of discretionary income available to them in October 2013, unchanged from last year – halting a three month period of year-on-year decline.
Annual essential item inflation drove the improvement, as it fell 0.7 percentage points to 2.1%, the lowest rate since February 2010.
However, the year-on-year rate of income growth was 1.9%, the lowest growth since March 2012.
The price of gas and electricity was up 8.3% and 8.6% respectively over the 12 months to October, putting pressure on consumer spending.
Asda president and chief executive Andy Clarke said: “The fall in essential item inflation and some much needed stability in disposable income will bring a welcome respite for customers.
“We should welcome positive signs of improvement in the macro economy, but it’s clear that it will be a challenging Christmas. We know it will take time for any macro improvements to filter down into a real sense of relief for families, especially in regions hardest hit by the economic downturn.”
He added: “As petrol prices have fallen back and mortgage costs have declined, there is a glimmer of hope that we’re on the right track for 2014. But without a substantial improvement in income growth the journey to recovery will be slow.”