Family spending power shrinking
Families have suffered the worst deterioration in their spending power in 12 months, driven by a sharp decline in wage growth, a report has found.
Households had £155 a week of discretionary income in April, marking two months of annual declines in a row Asda's latest income tracker found.
The recent worsening trend follows a series of improvements to people's finances which had been recorded over the last year. Families are now £1 a week worse off than the same month last year and have £10 a week less than they did during a peak in February 2010, the report said.
Weak income growth was the "primary driver" behind people's budgets taking a turn for the worse, with wage growth falling at the fastest rate since the start of the economic crisis, the report said.
Employment prospects have weakened and average pay rose to just 0.8% over the year to April, marking the lowest rise since comparable figures began in 2001.
The cost of utilities such as electricity and gas was also a strong factor behind the decline in people's budgets, with gas prices up 8.3% year-on-year, marking the highest rate since August 2012.
There was some good news for motorists however, as fuel costs fell by 3.7% year-on-year.
The overall cost of transport saw a 0.1% annual decline, marking the first year-on-year drop since July 2009.
Rob Habron, economist at the Centre for Economics and Business Research (Cebr), which compiles the report, said: "A higher tax free personal allowance and lower inflation on some essentials, such as petrol, have helped this month to ease the stress on household finances. However, ongoing very slow wage growth and high unemployment are preventing any real gains to discretionary spending power. The squeeze on household incomes has returned in 2013 despite the gradually improving economy."
The report uses official figures to work out a family's spending power, which is the money they have left over after essential bills such as groceries, fuel, mortgage interest payments and rent.