The UK’s poorest families will see the amount of spare cash at their disposal drop by a fifth this year with £850 less to spend on non-essentials as shop prices hit a decade high. Pressure on family budgets is tightening as grocery price inflation reached 5.2% in March, the highest level since April 2012, according to the latest figures from market analysts Kantar. The company said prices were rising fastest for pet food and savoury snacks, such as crisps, but were still falling for some products such as fresh bacon. Spare cash is also under pressure from rises in the price of clothing and furnishings with non-food retail price inflation accelerating to 1.5% in March, from 1.3% in February, according to the latest report from the British Retail Consortium (BRC). This is the highest rate of non-food inflation since February 2011. Price rises are being fuelled by the rising cost of labour and basic commodities such as wheat and cooking oil – as well as energy and packaging driven by a combination of Brexit, resurgence in demand as economies reopen after pandemic lockdowns and the war in Ukraine. Helen Dickinson, chief executive of the BRC, said the full impact of rising costs for retailers and their suppliers was “yet to be seen”. “There have been mounting cost pressures throughout the supply chain for some time, including rising wages, input costs, global commodity prices, energy, and transport. Many of these costs are beginning to be exacerbated by the situation in Ukraine,” she said. Rising energy bills, food and transport costs are set to plunge many into the red with 13% of households claiming they are only just about managing to cover minimum payments on credit card bills with a further 6% already unable to, according to analysts at Retail Economics and digital wallet HyperJar. Richard Lim, chief executive of Retail Economics, said: “Rising inflation will see spending power under huge pressure, particularly for the least affluent households who spend a disproportionate amount of their income on non-discretionary items such as food, energy, and fuel.” For the average family, the cash left after paying for essentials will fall by almost 6.5% or £430 according to Retail Economics. “We’re likely to see recessionary behaviours kick in for many households who will cut back on the nice-to-haves and prioritise low costs to make their budgets stretch that little bit further,” Lim said. He said consumers typically cut back on non-essentials such as electrical goods, takeaways and recreational activities, traded down to cheaper alternatives and scaled back big-ticket purchases such as holidays abroad. In one sign of change, discounter Aldi grabbed its biggest share of the grocery market to date while Lidl matched its previous peak, according to the latest industry data from Kantar. The two chains were the only major supermarkets in the UK to expand in the three months to 20 March, helping Lidl confirm its spot as the UK’s sixth-largest supermarket chain ahead of the Co-op with 6.4% market share while Aldi reached 8.6%, less than 1% behind the UK’s fourth-largest chain, Morrisons.