The average income families have left after paying all of their critical bills has dropped to around £155, which is the lowest that it has been in 3 years.

While the economy is showing small signs of growing, at the lower end of the pay scale people are just struggling to live as real world living costs stretch beyond family incomes. The average British home has an income of just under £700 per week, of that £700 £117 is paid in taxes and £427 is spent on essential bills, transport, housing and food.

The report was compiled on behalf of the supermarket giant Asda by the Centre for Economics and Business Research. Asda is attributing the drop in spare money available to families on rising energy costs matched with the fact that incomes cannot keep up with the rate at which prices are falling. In the year up until April average income has risen by just 0.8 of a per cent which is the lowest it has been since the statistics started being recorded in 2001. This is bad news for the government, who are trying to encourage the UK to spend more money to help the country recover from a terrible economic chapter.

Because the economy has started to show signs of slight growth it is feared that interest rates could start to creep up from the base rate of 0.5 per cent as early as 2014, which could be disastrous for families that live at the low end of the wealth scale. Many already have to live month to month, getting by using short term lending and credit cards or by having to sacrifice spending on everyday items. The rates were originally not expected to rise until as late as 2016.

Rob Harbon who is an economist at the Centre for Economics and Business Research said that ‘The squeeze on household incomes has returned in 2013 despite the gradually improving economy.’