The average UK family was £10 worse off in February reversing the improving trend seen in recent months, the latest Asda Income Tracker has revealed.
This left the average UK family with £144 of weekly disposable income – 6.3% down from the same time last year.
Income growth remained weak at just 1.7% year on year in the quarter to January and when this is added to high inflation on the cost of basics, family spending power is being squeezed in both directions.
The official measure of the rising cost of living slowed again in February, as the consumer price index rose over the year by 3.4%.
However, this is a smaller drop in the inflation rate than seen recently, as the headline rate remains stubbornly above the Bank of England’s 2%.
Earnings growth fell back to the slowest pace in 18 months– just 1.7%. The last time it was lower than this was July 2010.
Unemployment stood still in the three months to January, unchanged from the previous reading.
Despite some improvements in the cost of utilities and transport, they are two of the main factors putting pressure on discretionary spend.
The cost of electricity and gas remains well above that of last year, and petrol and diesel prices by 4.2% and 4.7% respectively over the last year.
Asda said its customers want the government to cut fuel duty and more than half of those surveyed admitted they have had to cut back on driving due to the increased cost of fuel.
Asda president and chief executive Andy Clarke said: “It’s disappointing to see a reverse in improvements to the cost of basics seen in previous months, putting a further pressure on already squeezed family budgets.
“I take my lead from what our shoppers tell us, and I think the Chancellor has faced the same challenge that families face every day– balance the books, but find smarter ways to limit the impact.
“Asda mums told us loud and clear that the single most important thing for them was a cut in the price of fuel.”