THE average UK family is only £7 a week worse off compared to November last year, an improvement of £4 from its lowest point in September, according to Asda’s monthly tracker.
The grocery giant’s research also showed that the average UK household spent £135 a week on recreation in November, 5.1 per cent lower than a year ago, but the highest since May.
A sharp drop in the cost of fuel helped reduce the burden of the cost of living as Petrol prices fell by 9.3 pence per litre in November.
Asda asked customers, ‘if your household’s disposable income increases in 2009, will you spend or save the extra?’ – just over 70 per cent of the respondents said they would save but also use extra income to pay off debts.
Andy Bond, ASDA CEO and President, said: “There is some good news for families as inflation falls and disposable incomes increase but the mood of the nation is that cutting back on conspicuous spending, being more frugal and an increased savings mentality will be a priority for most families in 2009”.
Cebr says inflation is expected to fall sharply over the next few months, further easing the cost of living pressures on family finances.
One factor that could limit the extent of the drop in inflation is the steep fall in the value of sterling.
On a trade-weighted basket of currencies, the pound has lost more than a fifth (21 per cent) of its value since the beginning of the year. This means the price in pounds of imported goods will rise.
The UK imported £347 billion worth of goods and services over the first three quarters of 2008 and imports account for 31 per cent of gross domestic product, so this is an important consideration.
Charles Davis cebr economist said: “The Asda income tracker shows that the Pressures on average UK family budgets were eased by another significant fall in Inflation in November.
“The VAT cut and collapsing global commodity prices will further reduce the cost of living for UK families providing some festive cheer.”
By Cathy Black
Photos by Fabrizio Belluschi
© FAME Inc