Consumer spending has weakened further with public sector pay freezes among the contributing factors, according to Asda.
The latest Asda Income Tracker has revealed that family spending power fell by £9 per week in June.
The average UK household had £167 a week of discretionary income in June, 5.1 per cent lower than a year earlier. The tracker revealed a slight rise in average earnings growth, but still well below pre-recession levels.
Consumer price inflation fell in June from 4.5 per cent in May to 4.2 per cent, slightly easing the pressure on real household incomes with a falling in the price of discretionary items. However, this is unlikely to signify the start of a downward trend, with the price of essential goods and services continuing to grow, the supermarket said.
While average earnings growth increased marginally in June, recruiting conditions remained constrained.
The Asda report notes that average earnings rose at an annual rate of 2.1 per cent in the three months to May however there was a notable fall in earnings growth of the public sector, possibly as a result of the pay freeze that came into effect in April.
London now has slowest gross income growth, as the employment rate over the past quarter fell by 0.3 percentage points in the three months to May from the previous quarter, leading to slow gross income growth in the region. The employment rate rose by 0.6 percentage points in both Scotland and Wales over the same period. This helped to support income growth in Q2, leaving Scotland as the region with the fastest expansion in gross incomes, and Wales close behind.
Asda president and CEO Andy Clarke said: “Nationally, shoppers’ disposable incomes are still down year-on-year. While it’s a relief to see a significant improvement on last month’s record drop, only time will tell whether this is a one-month blip or the beginning of a trend.
“Across the regions, it’s a mixed picture. While spending power dropped everywhere, the fall in London and the South East was relatively mild. That contrasts with a much more dramatic fall in Northern Ireland and the North West where the higher car usage, and dependency on petrol, leaving a larger hole in household budgets.”
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