Scots are ‘£12 better off a week’ as cost of living falls but pensioners still struggle

A supermarket price war and low fuel costs have left the average Scot £12 a week better off compared to this time last year as the UK continues to enjoy “no-flation”, according to latest figures.

Supermarket giant Asda’s income tracker has revealed that the average family north of the border has seen its spending power increasing on the back of a 6.8 per cent rise in household budgets compared to March 2014.

Across the UK a trend of “No-flation” prevailed as inflation remained at 0.0, its lowest level in 55 years thanks in large part to the falling cost of clothes and shoes.

The drop in the cost of these items, which fell by 0.2 per cent over the 12 last months, means paying for a summer wardrobe will be cheaper this year.

And drivers are beginning to benefit from falling gas prices, which also helped to drive inflation down to zero last month after falling 4.2 per cent over the year.

Households are also reaping the rewards from promises made by gas companies at the beginning of the year to drop their prices.

Andy Clarke, president and CEO of Asda, said: “Wherever you live in the UK this month’s tracker brings more positive news for those holding the purse strings.

“Eighteen months of continuous growth is good news for people living in all corners of the country and seeing this growth rise fastest in areas such as Northern Ireland and The Midlands supports my belief this recovery is real and sustainable. The economy continues to roll on the road of recovery and the gap between regional disparities reduces. But what continues to interest me is the change in spending habits. Speaking to customers, they feel more confident than one year ago but they are still bruised from the recession.”

However, “no-flation” is no joke for pensioners who have suffered another blow to their finances after the value of their pots collapsed to an all-time low.

As elderly people continue to struggle to keep up with the cost of living with low interest rates battering their savings, they also appear to be paying the price for new pension freedoms brought in by the coalition government.

Two weeks after rule changes gave the retired the right to spend their pensions as they pleased, the rate of return from annuities has collapsed due to lower demand and a sharp fall in gilt yields.

Last year the average annual income payable from a standard annuity fell by 5.7 per cent and 2015 has already seen an even more marked decline.

The average annual income payable on a single life standard level without guarantee annuity for a 65-year-old with a pension pot of £50,000 has dropped by 6.4 per cent since January.

It is worse than the previous low set in November 2012, according to the website Moneyfacts.