Asda says UK consumer faces income squeeze

Asda, Britain's No. 2 grocer, said the outlook to the end of 2010 remains challenging with UK families facing the lowest amount of disposable income in the final quarter for two years.
Ahead of the publication of second-quarter sales on Tuesday, Asda, owned by U.S. retailer Wal-Mart Stores, said research carried out on its behalf by Cebr showed UK families' disposable income in December is forecast to be 172 pounds ($268.4), 5 pounds lower than 2008.
"These are increasingly uncertain times for millions of families across the UK," said Asda Chief Executive Andy Clarke.
Analysts expect Asda, which trades from 377 UK stores, to report broadly flat underlying sales for the second-quarter to June 30, impacted by subdued food price inflation and consumer worries over prospective tax rises and employment uncertainty.
That compares with a decrease of 0.3% in the first three months of the year, the first fall since early 2006, and a rise of 4.6% in the final quarter of 2009.
Britain's grocers are facing more moderate food price inflation and a jump in petrol prices that has left shoppers with less to spend on groceries.
Consumers, worried by the coalition government's measures to rein in record debt with tax increases and public sector cuts, are also becoming more wary in their spending.
In June market leader Tesco posted a 0.1% rise in first quarter underlying UK sales, its weakest performance for years, while J Sainsbury, Britain's No. 3 grocer, reported its smallest rise for over five years.
In May Wm Morrison Supermarkets, Britain's No. 4 grocer, posted a steep drop in underlying sales growth, pegging back its long-standing outperformance of rivals. Wal-Mart is expected to publish second-quarter earnings at about 1100 GMT.