According to the latest monthly Asda Income Tracker, the average UK family is now £15 a week worse off than they were a year ago.
Escalating energy bills, high food costs, insurance and petrol rises are all contributing towards a lighter purse. 
The Bank of England governor, Sir Mervyn King, yesterday admitted that workers in Britain were suffering from the largest fall in living standards in ‘living memory’.
Asda says that the £15 drop in spending power per week is the largest in the four year history of their Income Tracker, and the current cost of living stranglehold is claimed to be the deepest and longest for over 60 years.
The Income Tracker has the average weekly income for UK households after tax at £597, but essential outgoings including food, heating, petrol etc. eats up £434 per week, which leaves £163 a week to cover all other needs, a drop of 8.3% in 2010.
Sir Mervyn King warned the Treasury Select Committee of a ‘very large squeeze on household incomes’ and said that the current CPI inflation rate of 5.2% was ‘very uncomfortable’.
He added: “Real take home pay has fallen by more in the past two years than in any time in living memory.”
He did, however, say that inflation is close to peaking and it should fall sharply in 2012, giving UK families some financial relief.
The monthly Asda Income Tracker is compiled with the Centre for Economics and Business Research (CEBR) and they predict that the economy will contract for the July to September months, risking further job losses.
Chief Executive of Asda, Andy Clarke said: “While disposable income was down everywhere in September, there is clearly a growing divide between the North and the South.
“Spiralling petrol costs are piling on extra pressure on households across the north of England and Northern Ireland where families are much more reliant on the car to get about.
“As we head into winter and the nights draw in we know that the cost of food, transport and utilities go up.”
In other news, the British Bankers Association (BBA) found that families have been following the Prime Minister’s controversial advice to pay off their credit card debts.
In September, repayment outpaced spending on credit cards, loans and overdrafts by £40 million. Whilst this is good news for families trying to reduce their debts, the decrease in spending and borrowing will undoubtedly have a negative effect on retailers and the economy at large.
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