Sustained inflation and the rising cost of fuel, gas and electricity have forced the sharpest decline in family spending power on record, the Asda Income tracker has revealed.

The average UK household discretionary weekly income in July fell by £14 or 7.9% to £162, compared to the same period in 2010 - the biggest drop since the income tracker was launched in 2007.

The findings are part of a report carried out by the Centre for Economics and Business Research (CEBR) for the grocer.

The increase in the consumer price index measure of inflation to 4.5% in August, up from 4.4% in July, came at a time when consumers are already under pressure from rising fuel and utility bills.

Gas prices in August were 8.3% higher than the same period last year, while electricity prices rose 5.1% last month.

Asda president and chief executive Andy Clarke said: “It’s clear from this record drop in disposable income that British families have never had it so tough. Our customers are feeling the pinch – they’re clear they want more help to help make ends meet.”

CEBR managing economist Charles Davis said: “With the UK economy in a particularly precarious state at the moment, things could get worse before they get better.

“However, inflation should fall back in 2012 and the Bank of England is unlikely to raise interest rates anytime soon given the weakness in the UK economy.”

The rising cost of living and fears about the state of the job market as further public sector cuts loom have combined to put pressure on families, with 90% of people saying that things are tougher this year than last. The finding was part of Asda’s ‘Pulse of the Nation’ survey, carried out in September.