The recently released report has revealed a typical household had £166 a week of discretionary income in April 2009, a 1.8% increase compared to the same time last year. The fall in mortgage payments and the declining costs of essentials such as food, electricity and gas have all helped to increase spending power for families across the UK.

The average UK family was £3 a week better off in April 2009 compared to a year earlier, as the ASDA income tracker reached positive territory for the first time since January.

Discretionary spend has risen in all regions across the UK apart from in Northern Ireland, where the average family’s spending power has fallen by £2 per week.  The sharp fall in the cost of mortgage interest payments has had less of a positive effect in Northern Ireland, with the average family there spending less on mortgage interest payments compared to families in other parts of the UK.

Families in the South West had the largest increase in spending power at £5 per week, whilst London dwellers saw a gain of £1, partly due to a higher proportion of households renting property in the capital. Londoners spend more than the UK average on housing and utility costs, which were up 6.1 per cent year on year.

Charles Davis, economist at Cebr said:  “The ASDA income tracker moved into positive territory as cost of living pressures eased – with inflation on the retail price index showing the largest decrease in prices since 1948. However, families continue to come under pressure from the weakest earnings growth since records began, rising unemployment and falling house prices.

“These factors underline the uncertainty that exists for households across the United Kingdom. Hence, the rise in spending power may not necessarily translate into a rise in consumer spending.”

Andy Bond, ASDA President and CEO said:  “Whilst it’s reassuring to hear that UK consumers have more disposable income, people are still concerned about losing their jobs.  With weak growth in average earnings and falling house prices, it’s vitally important that retailers work hard to rebuild consumer confidence as quickly as possible.

“We need to do everything we can to strip out unnecessary cost from our businesses and deliver value in order to keep our shoppers spending.”

Inflation is likely to fall further throughout 2009 as spare capacity in the economy puts downward pressure on prices.  Whether or not the positive direction of the Income tracker is maintained will in large part depend on the future movement in employment levels over the coming months.

To read the whole report click here.