Families £7 a week worse off

Last Modified: 27 Mar 2008
Source: PA News

Families are an average of £7 a week worse off than they were a year ago as hikes in the cost of living continue to eat into their incomes, figures have shown.

Households earned around £17 a week more before tax during February than they did a year earlier, but this increase was more than offset by a £24 jump in the weekly cost of essentials such as food, transport and fuel.

As a result people had an average of just £133 a week left to spend on leisure and entertainment after meeting their essential outgoings, 5.2% or £7 a week less than they had in February last year, according to research carried out by the centre for economics and business research (cebr) for supermarket group Asda.

The fall in disposable income was driven by a 6.2% jump in transport costs during the past year, with petrol soaring by 20.3%.

Families' incomes were further squeezed by a 5.6% year-on-year rise in the price of food and non-alcoholic drinks and a 3.5% rise in energy bills, with five of the UK's six major gas and electricity providers hiking their prices during the month.

These rises were partially offset by a 4.6% drop in the price of clothes and shoes compared with a year earlier, while the cost of communication goods and services fell by 3.9%.

But at the same time earnings growth remained subdued, with net incomes rising by an average of just 2.3% in the year to the end of February, while taxation remained high with income tax and national insurance payments increasing by 3.7% during the past year.

Overall, the average household had an income, including money from investments and benefits, of £655 a week, on which they paid around £130 in tax and spent £392 on essential living costs such as food and fuel, leaving them only £133 of disposable income.

Cebr warned that the squeeze on discretionary spending was likely to get worse as the economy slowed.

It said: "As the impact of the credit crunch feeds through to the real economy, earnings growth will continue to cool through 2008."

These news feeds are provided by an independent third party and Channel 4 is not responsible or liable to you for the same.