The average UK family was £7 a week worse off in June compared to the same time last year, according to the Asda Income Tracker.
This represents the biggest fall in disposable income available to families since the beginning of the year. The average UK household had £171 a week of discretionary income in May, down from £178 this time last year.
A nationwide poll conducted by grocer Asda found almost 40% of people are prepared to take a pay cut to avoid unemployment and one in eight are concerned about losing their jobs. Only 34% of people currently fell secure in their existing role.
The cost of living has continued to rise, with inflation levels at 3.2% in June.
The only broad area of spending on the consumer price index which has given a boost to households’ discretionary income was the cost of clothing and footwear, which was 1.4% lower in June than a year ago. This is below the long-run average levels, as clothing and footwear has decreased on average by 4.6% annually over the June 1993 to June 2010 period.
Charles Davis, the economist at Cebr who compiles the report for Asda, said: “The Asda Income Tracker reveals that discretionary income has fallen by 4.2% in June year-on-year. Despite reductions in official unemployment figures and an easing of inflation, annual growth in earnings remains weak while the cost of many essentials continue to rise.
“The bottom line is that real family spending power has continued to fall and the outlook continues to look tough for households.”
Andy Clarke, Asda chief executive, said: “Our customers are telling us that not only do they have less money, but many are worried about their job security, and can’t see their finances improving for some time.
“That’s why it’s really important we do everything we can to help lessen the blow.
“We’re ready for the challenge – and will do everything in our power to ensure families don’t pay a penny more than they need to for the things they need most.”