Families '£12 a week worse off'

Updated: 
Jobcentre PlusFamilies are £12 a week worse off on average than they were a year ago, as deteriorating employment conditions have "overshadowed" signs of living costs easing.

And weak job prospects are expected to act as an increasing drag on finances, a report has warned.

Asda's monthly Income Tracker found that unemployment rises helped to drive average household disposable incomes down to £160 a week last month, a 7.2% decrease on the same period in 2010.

The study argued that high unemployment, with conditions being particularly tough for younger workers, has eclipsed the slowing in inflation which has gone towards easing pressures on family spending power.

It said average household budgets were affected by more people being left out of work and also found that job losses would have had a wider negative impact on people's willingness to spend the cash they had left over after paying regular bills.

Charles Davis, managing economist at the Centre for Economics and Business Research (Cebr), which compiles the report, said: "Slowdowns in the rising cost of living as inflation falls is good news for UK consumers, taking some pressure off family budgets.

"However, weak employment prospects will increasingly act as a drag on household finances. Private businesses are reluctant to hire and this, combined with public sector job cuts, is likely to result in continued weak wage growth.

"Unfortunately, it is expected to be some time before consumers start to see significant gains to real incomes."

Despite the recent easing of inflation, gas and electricity prices grew by 19.8% and 14.1% respectively over the year to December, the report said, with high petrol and diesel costs also putting pressure on budgets.

"It's encouraging to see the cost of some essentials coming down," said Asda chief executive Andy Clarke. "However, we know jobs still matter, with the highest levels of unemployment for 17 years having a real impact on the way families feel."

© 2012 Press Association

SPONSORED FINANCIAL CONTENT