Although inflation and the employment rate are both beginning to take tentative steps towards improving household budgets, fluctuations in the market for essential items continue to put a strain on the purses of workers. This became hugely apparent this week, with data provided by Asda’s Income Tracker showing family spending power fell to its lowest level in six months during September.
Electricity prepayment meter key
According to the figures, spending power dropped by £2 per week year on year last month, leaving families with just £157 of discretionary income to see them through the month after paying for essentials. This, Asda believes, is due to a very weak increase – 0.8 per cent across three months – in the average UK wage, which amounted to less than a third of the rate of essential item inflation.
Furthermore, the cost of living continued to outstrip net income growth, which remains at a solid 2.1 per cent.
Another factor highlighted by Asda as a problem standing in the way of spending recovery on an individual basis is the rising cost of utilities. Gas prices rose by 8.1 per cent and electricity by 8.3 per cent in September, marking the highest rise for three months and, as this coincided with the start of the cold snap, significantly eating into workers’ pay packets.
Utilities now cost a mammoth 24.7 per cent more than they did in 2008, which amounts to £700 per year in real terms. Should this trend continue, and experts believe that this will reach a difference of £4,200 by the year 2018.
However, on the positive side, essential item inflation did indeed drop slightly to 2.8 per cent, easing the cost of foods such as fruit, vegetables and cereals for families on their weekly shop. Additionally, although most of the country experienced a fall in spending power, rises of 1.2 per cent and 0.6 per cent in the East of England and Scotland respectively demonstrated the positive impact of strengthening local economies.
President and CEO of Asda, Andy Clarke, believes that the slight economic recoveries so far have failed to truly make life easier for UK households.
He says; “It is becoming even more evident that action needs to be taken to address widespread regional discrepancies.
“Aside from overall household spending power being at a six month low and the rising cost of energy bills adding extra pressure, when you look beyond the capital and South East the situation across the regions gets steadily worse – with families in Northern Ireland and the North East still squeezed to a far greater degree.”
Do you think that overall economic improvement will be enough to bring low income areas onto a par with affluent areas such as London and the South East, or do local authorities in struggling areas need to seek ways in which to strengthen and build up regional economies?
Previous Post
Royal Mail Sitting on Land and Property Worth Big Money
No related posts found for this post.
