The average UK family had £10 a week more disposable income in October 2009 than in the same month last year, according to the latest report from the Asda Income Tracker.
The average household had £162 a week of discretionary income in October this year, 6.5% higher than last year. This represents a significant increase year-on-year, but in cash terms discretionary income has been flat for the last three months.
Asda’s report said the improvement was due to the fact that the Bank of England base rate was 4.5% in October last year, meaning many households faced considerably higher mortgage repayments than now.
However, the report added that a fall in Asda’s Income Tracker is expected over the coming months as transport costs, which have increased 3.5% year on year, continue to rise, and food and drink inflation increases.
The annual rate of inflation increased to 1.5% in October, up from 1.1% in September. This is the first rise in the annual rate of inflation in seven months and the most significant rise since September 2008.
Charles Davis, an economist at Cebr who compiles the report for Asda, said: “In October, the Asda Income Tracker shows a smaller year-on-year gain in discretionary income than September. Households are better off compared to a year ago, thanks to falling mortgage payments and utility bills.”
Andy Bond, Asda president and chief executive, said: “Although we are seeing a rise in some household essentials, it’s up to retailers to try and keep prices as low as possible for customers during the countdown to Christmas.
“With transport costs on the up and food inflation rising, we’re doing everything we can to keep prices down for customers. Whether that’s offering the cheapest petrol, the best deal on your Christmas basket, or amazing offers on George and home and leisure, at Asda we’re determined to make the festive season even more affordable.”