Belfast Telegraph

Families are squeezed by rising prices and static wages

Real disposable incomes across the UK dropped to their lowest levels in nine years in the first quarter of this year, as families were squeezed by high prices and sluggish wage growth.

Taking inflation into account, take-home income dropped by 1% on the quarter to reach £273 a week, the lowest level since 2003, an Office for National Statistics (ONS) study showed.

Real incomes per head also dropped by 0.6% in the first three months of this year compared with the fourth quarter of 2011, to £4,444 across the quarter, the lowest figure since the summer of 2005.

The ONS said the erosion in people's budgets was "primarily due to prices going up at an increasing rate over most of the period", as inflation pushed up the cost of regular outgoings such as energy bills.

High unemployment and a tough jobs market continue to exert pressure on people's spending power.

Low wage rises meant that salary increases contributed a "relatively small" amount to income growth, the study said.

Howard Archer, chief UK and European economist for IHS Global Insight said that despite signs that some of the pressure on households is lifting with inflation easing off, the figures suggest people are likely to keep a tight rein on their spending.