The average UK household had £131 a week of discretionary spend in February, 9.2 per cent less than a year earlier.
According to Asda, the figure is the lowest monthly value since the grocer began its income tracker. It means families were £13 a week worse off in February, due to a sharp drop in earnings growth caused by the collapse in bonus payments and an increase in taxes.
Discretionary spend was also squeezed by a rise in prices, following the ongoing effects of sterling depreciation raising the cost of imported goods.
Although total household incomes were £13 a week higher in February compared with the same month last year, average families paid £3 a week more tax than a year earlier, so net household income was £11 a week higher.
Asda president and chief executive Andy Bond said: “The continued weakening of the labour market and spike in inflation have pushed the income tracker to a new low. It means families are now £13 a week worse off than a year ago.
“The cost of living is being pushed back up, in part, by the largest depreciation in sterling’s value since the early 1970s - making imported goods more expensive - and by some retailers pushing prices back up again after their January Sales.”
He continued: “Although we expect lower commodity prices to filter through later this year, the challenge for retailers is to keep prices permanently low for consumers and not get hooked on short-term discounts.
“In the longer term the best way to lock down inflation is for businesses like ours to remove all unnecessary costs from their operations, and for Government to actively promote competition, not seek to restrain it.”
Cebr senior economist Charles Davis said: “The Asda income tracker showed a steep drop in January and February 2009 as earnings fell sharply. A larger than expected rise in inflation in February made the hit on household incomes even worse. We still expect inflation to drop noticeably through 2009 but earnings growth is likely to approach zero - hitting the average UK family’s discretionary income.”