We're All £32 A Week Worse Off

[exiges]

http://uk.finance.yahoo.com/news/Consumers-32-worse-month-tele-4289151132.html?x=0

Asda (NYSE: WMT - news) 's Income Tracker reveals that consumers were £32 a month worse off in December - and it is going to get worse.

Consumers spending power fell by £8 a week last month and the trend is set to worsen with inflation heading towards 5pc.

The first Asda Income Tracker in 2011 has revealed that in December 2010 family spending power fell by £8 per week, the largest fall on record.

The decline in family spending power in December 2010 is the largest annual fall since the Asda Income Tracker began in March 2008 and spending power fell in annual terms during every month of 2010.

The average UK household had £172 a week of discretionary income in December 2010, 4pc lower than a year earlier. The £8 a week fall compared to the same month a year earlier is the largest decline on record.

For 2010 as a whole, average household discretionary income was down 2.2 per cent from 2009 levels.

The findings come just days after Mervyn King, the governor of the Bank of England warned households that inflation is set to rise to 5pc this year. He told an audience of business leaders in Newcastle (Frankfurt: 725198 - news) on Tuesday that that inflation has climbed to its current level of 3.7pc because of rising import and energy prices and taxes, and that these factors had squeezed real take-home pay by around 12pc.

The index showed that petrol costs soared 12pc last month, while food prices rose by 6pc.

Charles Davis managing economist, Centre Economic Business Research, who carried out the research for Asda said: “The index shows 2010 was a tough year for the consumer. The cost of essential goods and services rose at a faster pace than average wages. The picture for 2011 looks set to be equally tough for the consumer.

"The VAT increase in January 2011 will keep inflation elevated this year, while public sector cuts will start in earnest. As such wage growth will remain modest. This is likely to result in lower levels of disposable income in real terms for families in 2011 compared to 2010.”

Edited January 28, 2011 by exiges

[leicestersq]

http://uk.finance.yahoo.com/news/Consumers-32-worse-month-tele-4289151132.html?x=0

Asda (NYSE: WMT - news) 's Income Tracker reveals that consumers were £32 a month worse off in December - and it is going to get worse.

Consumers spending power fell by £8 a week last month and the trend is set to worsen with inflation heading towards 5pc.

The first Asda Income Tracker in 2011 has revealed that in December 2010 family spending power fell by £8 per week, the largest fall on record.

The decline in family spending power in December 2010 is the largest annual fall since the Asda Income Tracker began in March 2008 and spending power fell in annual terms during every month of 2010.

The average UK household had £172 a week of discretionary income in December 2010, 4pc lower than a year earlier. The £8 a week fall compared to the same month a year earlier is the largest decline on record.

For 2010 as a whole, average household discretionary income was down 2.2 per cent from 2009 levels.

The findings come just days after Mervyn King, the governor of the Bank of England warned households that inflation is set to rise to 5pc this year. He told an audience of business leaders in Newcastle (Frankfurt: 725198 - news) on Tuesday that that inflation has climbed to its current level of 3.7pc because of rising import and energy prices and taxes, and that these factors had squeezed real take-home pay by around 12pc.

The index showed that petrol costs soared 12pc last month, while food prices rose by 6pc.

Charles Davis managing economist, Centre Economic Business Research, who carried out the research for Asda said: “The index shows 2010 was a tough year for the consumer. The cost of essential goods and services rose at a faster pace than average wages. The picture for 2011 looks set to be equally tough for the consumer.

"The VAT increase in January 2011 will keep inflation elevated this year, while public sector cuts will start in earnest. As such wage growth will remain modest. This is likely to result in lower levels of disposable income in real terms for families in 2011 compared to 2010.”

If we continue to put those who are working at the back of the queue, this will get worse. All of that food on the shelves is put there by people working in the private sector. However, they get money taken off of them to pay for people on benefits and public sector workers and their pensions. Due to demographics, more and more people are moving out of productive work and into benefits.

To try and pay for this, the government is taxing workers more, particularly the middle to lower paid groups, because they are easier to tax. The problem is that this creates a horrible dynamic. Those on the lowest wages may find that they are better off, either working in the illegal sector, where they can claim benefits and cash in hand no tax for working, or that they are just better off not working at all.

Remember that money is a claim on what has been produced. If production goes down, and there is just as much money chasing everything, prices will go up.

So we have people moving out of the taxed legal sector, as a result of the incentives set up by government, and at the same time more are on index linked benefits, which fixes the real value of what they consume. As there is less being put on the shelves, those on benefits and in the public sector, are getting the same amount of stuff as they previously did. But if they get the same, then someone else has to take a hit. That is the private sector worker working in the taxed sector. In order for them to get a lower share, the real value of what they receive after taxes, has to fall sharply.

And if you reduce the reward for productive output relative to the reward for non-productive output, what are you going to get more of?

Eventually we will all be sat on our backsides, with a pocket full of benefit money, wondering why there is nothing affordable to buy.

[Britney's Piers]

If we continue to put those who are working at the back of the queue, this will get worse. All of that food on the shelves is put there by people working in the private sector. However, they get money taken off of them to pay for people on benefits and public sector workers and their pensions. Due to demographics, more and more people are moving out of productive work and into benefits.

Really? I thought they got money given to them in agricultural subsidies.

[Misanthrope]

Link to the (technicolour!) report:

http://your.asda.com/assets/attachments/15742/original/ASDA_income_tracker_January_2011.pdf

[LuckyOne]

If the average house price is 165k and it falls by 1% per month over the next year, the average FTB is about GBP 380 a week better off for as long as they don't buy.

[Realistbear]

All?

We are not all in it together you know. Take the Banksters for example.......................................please

[winkie]

...well if you are £32 per week worse off, what do they expect people to do? spend £32 less or borrow more or sell some gold or furniture or go to a loan shark, or go down to the council offices and sit on the desk or ask for a pay rise?

...take your pick.....and good luck.

[ken_ichikawa]

So we have people moving out of the taxed legal sector, as a result of the incentives set up by government, and at the same time more are on index linked benefits, which fixes the real value of what they consume. As there is less being put on the shelves, those on benefits and in the public sector, are getting the same amount of stuff as they previously did. But if they get the same, then someone else has to take a hit. That is the private sector worker working in the taxed sector. In order for them to get a lower share, the real value of what they receive after taxes, has to fall sharply.

It's quite funny you know.... I work in an office which we share with an accountancy firm, on the surface it looks ok, but absolutely EVERYBODY there has a side line doing something to make some cash on the side...

These accountants are supposed to be well paid white collar jobs but everybody is doing something on the side. This week I was offered a couple cartons of smuggled cigs. Some red diesel which had been dyed to look a horribly browny colour.

BUt the government doesn't understand laffer curves they think they can squeeze and squeeze and squeeze but they have yet to realise the person they are squeezing is dead yet they are surprised when no more comes from that person.