The average UK family were £9 a month better off in July than they were in the same month last year according to the monthly Asda income tracker.

As interest rates were kept on hold by the Bank of England and food and drink inflation was at its lowest levels since September 2007, UK households had on average £163 of discretionary income a week. That is 6.3% higher than last year.

Asda president and chief executive Andy Bond said: “”This is obviously a positive trend for consumers who have been feeling the pinch in the credit crunch. As we’ve seen over the past year, even a small movement in discretionary spend can make a big difference to a household budget.

“However, how people choose to spend their money is still dictated by sentiment, and consumers remain fundamentally cautious about the future. Despite households now being £9 a week better off, these continue to be challenging times. It is by no means going to be a straight line to economic recovery.”