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Families '£50 poorer than in 2010'
Families were almost £50 worse off last month than they were two years ago - and any strong growth in their spending power is set to remain "elusive", a study has said.
Households' discretionary income improved for the sixth month in a row in November as their finances continued to stabilise, but the rate of improvement slowed as big increases to food costs kicked in, Asda's latest Income Tracker found.
Weak economic conditions are likely to continue into next year, meaning earnings growth is unlikely to see a significant boost and budgets will remain squeezed, the study said.
Energy price hikes following a string of announcements by companies and increases to food costs are likely to keep living costs high next year, the study said.
Families had £146 a week of discretionary income last month, meaning they were £1 a week better off than a year ago but compared with November 2010, they are still £12 a week worse off.
Rob Harbron, an economist at the Centre for Economics and Business Research which compiles the report, said: "As 2012 draws towards its conclusion it is encouraging to see the relative stabilisation of the Income Tracker in November this year, compared to the £13 annual reduction in November 2011.
"However, pressures on household budgets do remain and consumers still face a difficult road ahead. Price inflation on essential items is likely to be elevated in 2013 while weak economic conditions will hold back wage increases.
"Robust growth in family spending power is expected to remain elusive."
Food products were the largest contributor to increases in living costs in November, with prices rising over the past year by 3.9%. This was the fastest increase in food prices since April and reflects poor crop yields due to bad weather this year, according to Asda.