Families '£14 a week worse off'

The typical family had just £130 of disposable income left during the month after paying tax and meeting all of their essential outgoings, according to Asda.

The fall in disposal income came despite a £19 increase in people's weekly average post-tax earnings to £545.

But this gain was more than wiped out by a £33 jump in the cost of essential goods and services, such as food, utility bills and transport, with these now costing an average of £414 a week.

Overall, people were 9.6%, or a record £14 worse off during September than they were 12 months ago, with their level of disposable income falling year-on-year for the sixth month in a row.

The Centre for Economics and Business Research (Cebr), which carried out the study for Asda, said inflation on the essential goods and services used by a family reached 6% in September, driven by a 4.4% jump in gas and electricity costs. At the same time, earnings growth remained weak, and 164,000 jobs were shed during the three months to the end of August.

But the group said food inflation now appeared to have peaked, with a fall in food prices during September bringing down the annual rate of inflation on food and drink to 11.3% from 13% in August.

Douglas McWilliams, chief executive of Cebr, said: "The Asda income tracker again vividly illustrates the squeeze on the average UK family, falling to a new low in September.

"However, September could well mark the peak of pressures on the cost of living for families as inflation is likely to fall quite sharply over the coming year as demand weakens with the incumbent recession.

"We have already seen signs of this as oil prices fell below 70 US dollars (£40.59) a barrel for the first time in over a year and the September inflation figures showed food prices have peaked."