Blog: Petah MarianClouds over UK consumer market continue to darken

Petah Marian | 27 January 2011

The clouds hanging over the UK consumer market continue to get darker, as Asda's income tracker today claimed to show the largest decline in family spending power since the data was first published in 2007.

According to the retailer's research, family spending power, which it defines as the amount remaining after taxes and basic items, was down by GBP8 (US$12.73) a week and represents the 12th month of consecutive decline.

The retailer said that the average UK household had GBP172 a week of discretionary income in December 2010, a 4.5% drop on the same period last year.

The main driver of the downward trend, Asda said, is the disparity between consumer price inflation and sluggish earnings growth. Gross incomes were up 2.3% in December against the previous year, while the cost of essential goods and services was 3.9% higher in in December 2010.

It said that the main factors putting downward pressure on family spending power in December was the transport sector, which was "by far the largest contributor to the headline rate of inflation in December with 6.5% annual growth".   According to the AA, the cost of unleaded petrol rose by 12.7% in December 2010 year on year, up from 9.6% in November. 

Additionally, the improvements in the labour market earlier in 2010 were reversed when unemployment rose to 7.9% over the three months to November, against 7.7% in the previous quarter, as the economy contracted by 0.5% in the final quarter of 2010.

RBS analyst Justin Scarborough echoed the results' sentiment, despite questioning some of its research methods. He argued that food prices are not up by 6.1% "as per the CPI data, but maybe 1-2%", adding that with high levels of promotion, "UK consumers are still being helped by the food retailers in terms of dialling out price increases".

However, he said: "With austerity measures ahead and with inflation remaining fairly high, things are likely to get worse in the short-term before they get better (hopefully!)."

Sadly, it seems that there are no clear skies on the horizon just yet.

 


BLOG

Consumers are cooking for social media - and how brands can capitalise

We hear a lot in the food industry about two interconnected trends: and social media and “foodie” culture....

BLOG

Nestle announces changes to senior team with new CEO on horizon

Nestle, set to welcome a new CEO on 1 January, has announced more changes to the make-up of its senior management team....

BLOG

Blue Bell Creameries involved in another safety scare

Blue Bell Creameries is trying to win back the trust of consumers after a fatal listeriosis outbreak last year was linked to its products - but in recent days the US ice cream maker has issued another...

BLOG

Hain Celestial's Orchard House deal waved through

The UK's competition regulator has given the all-clear to Hain Celestial's bid to buy UK food and beverage group Orchard House Foods, nine months after the US group announced the deal....

just-food homepage



Forgot your password?