Families are £15 a week worse off than last year

The Bank of England governor describes the squeeze as the worst 'in living memory'.

Energy bills and insurance costs are once again in the spotlight as it was revealed today that families are an average of £15 per week worse off than a year ago.

Asda's monthly Income Tracker, which is compiled with the Centre for Economics and Business Research, has identified the biggest drop in spending power in its four-year history. Sir Mervyn King, Governor of the Bank of England, has described this 'very large squeeze on household income' of £780 per year, as the worst in living memory.

The tracker calculates essential bills, such as food, heating, and lighting, as costing £434 per week. For the average household, this leaves only £163 per week. This is the third consecutive month of decline, and shows disposable income to have fallen by over 8% in a year.

King confessed that the current CPI inflation rate of 5.2% was 'very uncomfortable', but reiterated the Bank of England's predictions that inflation would cool significantly next year, offering some relief to clearly hard-pressed families.

He pressed on the government to force banks to lend to small businesses, after revealing that the latest round of 'quantitative easing' would not guarantee extra lending by banks.

Individuals and homeowners, however, can benefit by finding competitive rates for the highest and steepest rising costs. Check out Which4U's tables for utilities and insurance to see if you could save more.