UK families’ discretionary income fell for the eighth consecutive month in August amid rising inflation and modest wage increases, according to figures from Asda.
The decline in spending power means that families had £5 less to spend each week compared to the same month in 2009, according to the Asda Income Tracker.
The average family had £175 per week to spend in August.
The cost of living continued to rise at 3.1%. In contrast, pay growth was weak, increasing by 1.8% in the three months to July compared to the year-earlier period.
The main inflationary pressures eating into discretionary income were transport, which contributed 1.2% to the headline rate of inflation, and food and non-alcoholic drinks, which contributed 0.5% to the overall inflation rate.
Charles Davis, economist at the Centre for Economics and Business Research, which compiles the report for Asda, said: “Family spending power continued to be eroded in August. The cost of an average household shopping basket keeps rising, while earnings growth fails to keep pace.
“Events such as the grain export ban in Russia and floods in China and Pakistan serve as a reminder of upside risks to inflation.”