The average UK household was 3.8% worse off in February than a year ago as weaker earnings and inflationary pressures hit discretionary income.
According to the monthly Asda Income Tracker, UK families were £6 a week worse off last month than a year ago.
In January discretionary income fell 4.7% and the 3.8% fall in February meant that the average UK household last month had £149 a week of discretionary income.
The biggest impact on spending power has been weak earnings growth. In the three months to February it is estimated that gross incomes rose just 1.4% on average year-on-year. Before the recession the growth had typically been between 4% and 4.5%.
On top of weak earnings, the cost of essential items grew 3.1% and price rises on many goods and services have gone up due to the VAT reversal.
Asda chief executive Andy Bond said: “Since just before Christmas we have seen discretionary spending depleting, and in February 2010 UK families were £6 worse off than the same month last year.
“There is a significant drop from the highs of six months ago where families had £8 more a month to spend. It’s tough out there - and shoppers need our help.”