Asda index says UK families £14 worse off a week

August sees biggest squeeze on record as utility costs put pressure on disposable income

Family spending power fell by £14 a week in August 2011, the biggest ever decline since records began in January 2007, the latest Asda Income Tracker shows.

The average UK household had £162 a week of discretionary income in July 2011, 7.9% lower than a year earlier.

The report also said 90% of people say things are tougher now than they were this time last year. Asda customers say utilities and fuel costs are the biggest pressure on family disposable income.

"Family budgets are squeezed further by the rising costs of basics. Rising gas and electricity prices, following announcements from major utility suppliers, have started to feed through into the overall rate of inflation," the report said.

Annual inflation on the consumer price index increased again to 4.5% in August, up from 4.4% in July with price pressures continuing to soar well above income growth. Pressure on household spending power is set to get worse, with inflation predicted to rise further while conditions in the labour market took a turn for the worse this month, a trend that is likely to continue into 2012 as public sector cuts start to take effect, Asda warned.