Average UK household is now £4 a week better off

Morrisons has opened up another front in the supermarket price wars by cutting the cost of 135 more products. The supermarket chain, which is under sustained pressure to halt its declining sales, announced a range of price cuts to woo back customers. Chief executive Dalton Philips, who has faced criticism over the group's performance, insisted that the move would help slash household shopping bills. "These are permanent price cuts, not promotions, and they won't be the last," he said on Sunday.

The latest discounts are part of Morrisons's pledge to make price reductions worth £1bn over the three years. The chain is also shedding 2,600 staff in a bid to reduce costs and streamline its operations. Among the items reduced are giant pineapples – chopped from £2 to £1.25 each – and a 400g can of Don Mario tomatoes cut by a third, to 69p.

Households had suffered inflation-busting food price increases for most of the last decade. But recent tit-for-tat discounts in the sector have finally pushed prices down.

The latest inflation figures show that food and non-alcoholic drinks were 0.6% cheaper in May than a year ago, helping to drag inflation down to a five-year low of 1.5%.

Asda's latest Income Tracker shows the average UK household is now £4 a week better off than in May last year. It found a typical family was left with £171 a week of discretionary income once taxes and essentials bills had been paid, up from £167 last year.

However, wage increases are still lagging behind inflation – rising just 0.9% in the last year.

Rob Harbron, senior economist at the Centre for Economics and Business Research, is hopeful that real wages will soon rise. He said: "The latest fall in essential item inflation and the slowdown in inflation are both providing welcome boosts to household spending power.

"Although wage growth slowed recently, a strengthening economy is expected to push up earnings over 2014. It's encouraging to see the cost of such essentials as clothing, food and mortgage interest payments actually lower now than a year ago."

Source: theguardian.com