Average UK family £6 worse off a week in May than a year earlier - the biggest fall since the start of 2010, as earnings growth remains below pre-recession levels.
Asda's latest income tracker revealed that the average UK household had £210 a week of disposable income in May 2010 - down from £216 during the same month a year earlier. The figures signal the fifth consecutive month of decline in family spending power and reports a 2.6% year-on-year decrease in the discretionary income of the average UK household.

Asda also found that people were concerned that today's budget would signal even tougher times ahead, with 85% of those asked stating that a rise in VAT would have the biggest impact on their family finances and 60% suggesting that a rise in National Insurance would also be difficult.

The report, compiled by Cebr, explained that further pressure was put on families as the cost of living continued to rise at a fast pace, with a 3,4% rise in inflation, down from 3.7% in April. Fuell costs also remained a concern, with a 10% year-on-year increase in prices in May. On top of this, earnings growth remains below pre-recession levels, with regular pay increasing just 1.9% year-on-year in the three months to April.

Cebr economist Charles Davis said: "Annual growth in average family spending power has been in negative territory for five months in succession. Households are facing the headwinds of above target levels of inflation and muted growth in regular pay. Looking forward inflation is likely to fall back over the course of the year, but the fiscal tightening announced in the budget means the labour market outlook is still weak. Hence, the outlook for disposable income growth remains challenging."

Asda president and ceo Andy Clarke commented: "This month's Asda Income Tracker really shows how tough customers are finding it out there, even before the emergency budget. There are clearly challenges ahead for ordinary families as the nation addresses the deficit.

"Nevertheless, the best businesses will view this as a call to action, not a time to wallow, whinge, or wonder when the recovery will appear, but a time to do what British business does best - find ingenious, sustainable ways to reduce costs so whatever tough measures are on the way, customers don't notice a thing."