The Asda Income Tracker has revealed the first month of improvement in spending power in more than a year.
Although family spending power is down by £10 per week, a 5.6% drop compared with last year, it is the first time in 14 months it has not fallen lower than the previous month.

During March, gross income grew at an annual rate of 2.2% while inflation dropped 0.4% to 4% partly due to the fall in food prices, said the report.

Asda's president and ceo Andy Clarke said: "The message to retailers is clear, keeping prices as low as possible can make a real difference to the money left over at the end of the month."

Transport costs in March continued to rise with the price of petrol still likely to be the greatest burden on household spending this year. In the first three months of this year, London's average gross weekly household income was £936, £212 more than the rest of the UK. This has been found to be partly due to London spending less on transport compared with the rest of the UK.

In contrast, Northern Ireland, spending power has seen an annual decline of 11.9%. Weakness in the labour market is a key factor as Northern Ireland will likely be affected by public sector job losses and pay freezes.

Centre for Economics and Business Research's managing economist Charles Davis said: "The latest labour market data shows a fall in unemployment. Unless household pay packets grow more strongly over the coming months, the Asda Income Tracker is likely to remain weak throughout much of 2011."