Families worse off as living cost hike wipes out pay rises

Published on Saturday 21 June 2008 12:30

THE average family is £8 a week worse off than they were a year ago as increased living costs and a higher tax burden wipe out pay rises, research showed today.

Despite average earnings increasing by 23 a week during the past year, the typical family has six per cent less disposable income after meeting all their essential out-goings, according to supermarket Asda.

The latest figures come as research for Combined Insurance showed that consumers have seen their monthly out-goings soar by 26 per cent during the past two years.

The Asda research found that the average family has an income of 633 a week, 3.6 per cent more than in May 2007. But the amount of tax and National Insurance people pay has soared by 6.5 per cent during the same period and at the same time, the average cost of essential goods, such as food, clothes, housing and utility bills has also risen.

Shadow chief secretary to the Treasury Philip Hammond said: "Maybe this will make Gordon Brown realise why people are feeling so miserable."

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."