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Families '£11 a week worse off'

Families are £11 a week worse off than they were last year as the cost of living increases at twice the pace of wage growth, research has indicated.

A typical family had only £169 a week left over after meeting all essential costs during February, down from £180 in the same month of 2010, according to Asda.

It was the 14th consecutive month during which people suffered a year-on-year fall in their disposable income, while it was also the biggest drop recorded since Asda first began collecting the data in January 2007.

The figure also represented the third consecutive month during which the fall in people's spending power has reached a record high.

The group said the continued decline in people's disposable income is being caused by the combination of high inflation and muted wage growth.

Pay before tax rose by just 2.2% in January, the latest month for which figures are available, but Consumer Prices Index inflation was double this at 4.4% in February.

Commodity prices have continued to rise in recent months, while the disruption to oil supplies caused by the unrest in the Middle East put pressure on petrol costs in February.

Charles Davis, managing economist at the Centre for Economics and Business Research, which compiles the index for Asda, said: "The rising cost of essential goods such as petrol and food stuffs continues to place pressure on households across the country, compounded by weak earnings growth and concerns about job security.

"The labour market recovery is still not yet convincing. Public sector job losses this year, which appear to be occurring at a faster rate than the Government initially expected, are likely to lead to a significant squeeze on the incomes of many households.

"Public sector workers still in employment will be affected by a two-year freeze for those earning above £21,000, coming into effect from April."

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