Families '£8 per week worse off'

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Despite average earnings increasing by £23 a week during the past 12 months, the typical family has 6% less disposable income after meeting all their essential outgoings, according to supermarket group Asda.

The latest figures come as research for Combined Insurance showed that consumers have seen their monthly outgoings soar by 26% during the past two years driven by higher housing and energy costs.

The Asda research, which was carried out by the centre for economics and business research, found that the average family has an income of £633 a week, 3.6% more than in May 2007. But the amount of tax and National Insurance people now pay has soared by 6.5% during the same period to £129 a week, leaving people with take-home pay of £533, just 2.9% more than a year earlier.

At the same time, the average cost of essential goods, such as spending on food, clothes, housing, utility bills and transport, has risen by 6.2% or £24 a week during the past 12 months, to £402, leaving people with just £131 disposable income.

The rise in spending on essentials has been driven by a 7.9% jump in food prices, while the average family now spends 6.4% more on utility bills than a year ago. Transport costs have also risen steeply, increasing by 6.2%, with the cost of petrol soaring by 19.5% during the past year.

The report said that while consumer price inflation hit its highest level in 16 years at 3.3% in May, just looking at essential spending for the average UK family, showed the cost of living rose by 3.7%.

The research for Combined Insurance found that the amount people spend on bills and living costs has soared from an average of £945 in June 2006 to £1,281 now.

Consumers are spending about a third more on rent and mortgages than they were two years ago, while it said the cost of gas and electricity had risen by 32%. Council tax has increased by 22% during the past two years, while car running costs are 34% higher and spending on food has risen by 20%.

A Treasury spokesman said: "This report is misleading. In fact people have seen their tax bill fall in the past year as a result of a cut in the basic rate of tax to its lowest level in 75 years."