Worsening family finances concerns retailers as Christmas nears By Adam Uren and This Is Money Reporter Hopes that household finances were recovering along the same lines as the wider UK economy were dealt a blow today as families say their situation has worsened this month. Four times as many families, 29 per cent, said their finances had deteriorated during November compared with the seven per cent who have seen an improvement, a report from financial information firm Markit claims. It could spell trouble for the UK's already struggling high streets in the run up to Christmas, with the survey indicating the weakest consumer appetite for major purchases recorded so far this year. Struggle: Just under a third of households found their finances worsened during November. Markit's Tim Moore suggested that a recent string of price hikes announced by energy companies have dampened households' perceptions amid more positive news recently as sentiment about job security reached a new high this month. He said: 'November's survey highlights yet another setback for UK household budgets as weak pay trends and energy price rises appeared to overshadow recent positive news about labour market conditions. 'Households' views on their year-ahead financial outlook are now the most downbeat since February and well below those reported this summer, despite recent signs of stabilising job security.' Household finances have worsened at a much faster pace than the previous month (Source: Markit) Markit found that 42 per cent of the 1,500 households surveyed predict their finances will have worsened in a year's time, with just 24 per cent expecting to see an improvement. This is the most pessimistic outlook seen since towards the start of the year. The amount people are saving also appears to have fallen, with households reporting a tighter squeeze on the amount of cash they had to spend, with a third saying their spare cash had fallen, while only 8 per cent had seen an increase. The squeeze on finances comes as retailers continue to toil on the high street, with the British Retail Consortium revealing today that footfall decreased during October, the third fall in as many months. Trips to high streets, shopping centres and out-of-town retail parks dropped by 2.9 per cent compared to last year, which is the worst drop seen since the cold snap of March. Discretionary income in October was unchanged on the same month last year (Source: Asda) Asda chief executive Andy Clarke said stores face another challenging Christmas as improvements in the wider economy take time to filter through to the regions hardest hit by the economic downturn. However a survey from Asda offered a glimmer of hope for next year, showing that the weekly family budget available for discretionary, non-essential spending has stabilised after falling for three months. The average UK household had £158 a week of discretionary income in October, unchanged on the same month the year before. It is the first time since June that this figure has not fallen year-on-year. The Asda figures recorded a sharp fall in annual essential item inflation, down 0.7 per cent to 2.1 per cent, its lowest rate since February 2010. Mortgage payments were also down while fuel prices dropped too. Earnings have declined overall since March 2009, while the unemployment rate remains above seven per cent (Source: Asda) However, incomes were squeezed by low wage growth, with latest official figures showing average regular pay up just 0.8 per cent, while rising energy costs are also putting budgets under strain. Asda chief executive Andy Clarke, said the fall in essential item inflation and stabilising of spending power would bring a welcome respite for customers. 'There is a glimmer of hope that we're on the right track for 2014. But without a substantial improvement in income growth the journey to recovery will be slow. A Treasury spokesman said: 'This Asda survey is the latest sign that Britain's hard work is paying off and the country is on the path to prosperity. But times remain tough for many people. Rising energy bills have put considerable pressure on household incomes (Source: Asda)