The average household in middle Britain had 3.2% less disposable income in January than in the same time last year.
The finding comes from a new income tracker report launched by ASDA, which takes into account income, tax and basic costs like food and shelter to measure the average UK household’s disposable income.
The report reveals that despite earnings before tax increasing by £22 a week last year, the average family was £5 a week worse off.
The supermarket chain attributes this to the increase in tax and essentials like food, housing and transport, now costing £27 a week more.
The report found that the cost of living has risen by 4.9% while earnings growth have begun to fall. Transport costs have also risen, increasing by 6.4%, including a 19% rise in petrol.
Andy Bond, ASDA chief executive officer, says: “Our 15 million customers expect us to make the cost of living more affordable for them. I believe this gives us the right to talk about the issues that affect how much money people have to spend.”
He adds: “The latest figures indicate that 2008 is going to be a tough year for customers and confirms what we’ve known for some time, that household budgets are being stretched to the limit.
“A combination of factors is pushing up the cost of living for millions of families, making it more important than ever for retailers like ourselves to keep prices as low as possible. Only that way will we keep a lid on inflation.”