25 April 2012

NI Families Hit More By Cost Of Essentials Compared To The Rest Of UK

Families in Northern Ireland are the most impacted with the cost of essentials making up a larger proportion of family budgets, according to the latest Asda Income Tracker.

Families in NI had just £83 a week of discretionary income in the first quarter of this year, just over half of the national average.

London and the South East fared relatively well over the first quarter, with essential spending making up a smaller proportion of household budgets. Discretionary spend in London was £184 per week in Q1 2012, compared to a UK average of £144, and four times higher than cash available to families in North West and Northern Ireland.

This gap continues to widen, demonstrating the difference in economic challenges faced by families across the UK.

Asda Mumdex research has revealed that two thirds of mums budget more now that they did a year ago, looking for ways to make their money go further and choosing budgeting over spending on credit. Two fifths of Asda Mums (39%) also say they have made changes to their lifestyle because of the financial crisis, with 36% struggling to pay for the essentials in the last year, and nearly a quarter of mums (23%) borrowing just to get by.

Andy Clarke, Asda President and CEO, said: "It's worrying to see the cost of essentials creeping back up, increasing the demands on family budgets and putting pressure income growth.

"Unemployment drove the continued drop in disposable income in March and throughout the quarter, with a growing divide between the nations and regions.

"We're firm in our commitment to help tackle this in 2012, by creating new jobs, working with new communities and bringing Asda value where it matters most to families across the UK."

The official measure of the rising cost of living was up in February, as the consumer price index (CPI) rose over the year by 3.5 per cent, well above average earnings growth which remained weak at just 1.6 per cent. When slow income growth is added to high inflation on the cost of basics it’s clear that family spending power is being squeezed in both directions, resulting in disposable income levels eroding further.

As well as those that are in work seeing small year on year salary increases, well below inflation, tough conditions in the labour market mean unemployment is still having an impact despite slight year-on-year improvements in the headline rate. Balancing the two conflicting elements, family income growth is still very fragile, with the improving cost of basics overshadowed by the high number of workers becoming unemployed.

(CD/GK)