British families feel the pinch as disposable income falls to a nine-year low


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British families are feeling the pinch as disposable incomes fell to a nine-year low through a combination of inflation and minimal wage rises, it was revealed today.

The average amount households have to spend dropped by one per cent in the first three months of the year to £273 a week, the lowest level since 2003, the Office for National Statistics (ONS) said.

It said the main cause of falling spending power was price rises, notably inflation pushing up the cost of light and heat. The ONS added that high unemployment and a tough jobs market were increasing the pressure.

Families are also saving less as they try to make ends meet.

Howard Archer, chief UK and European economist for IHS Global Insight, said: “Consumers are likely to remain very cautious and restrained in their spending for some time to come. This caution is likely to be reinforced by concerns over the economic outlook and jobs.

Chris Leslie, the Labour treasury spokesman, said: “These figures show the harsh squeeze facing families and pensioners, which the Government's unfair policies are making worse.”