Judith McKenna said the true cost of living was only now "beginning to take its toll on British families" and was worried that policy-makers in Whitehall had little grasp of the impact on low income households.
She revealed Asda's own "average household" income tracking showed families' disposable incomes were falling fast, dropping 8pc year on year in May – the largest decline "ever".
It estimates the average family now has £165 a week in discretionary spending power and are facing a £14 "gap in their pockets" forcing many to ration.
"If you are an average family then £14 is a lot of money every week," she said. "Things are only just starting to bite,"
Ms McKenna said the Government had to explain "in plain English exactly how bad it is and what needs to happen with regular updates explaining where we are with the plan to help calm things down".
She said consumers were hearing about interest rates and the eurozone bail outs without fully understanding the impact on their own finances. "It's a toxic mix: Facts and fear. We have got to stop scaring people," she said.
"When I speak to people in our stores every week what they tell me they are getting increasingly worried.
"We talk about things in the press, how bad things are going to be, they hear about another eurozone crisis, they read about debt in Greece and billions of pounds of bail outs for it. But if you work on a checkout in Swansea or Glasgow or Leeds then you truly don't know what it means to you."
Ms McKenna said Asda was not planning on a recovery in consumer confidence "any time soon".
Her comments were echoed by J Sainsbury finance director John Rogers, who said the supermarket favoured by middle income families saw little prospect of a quick recovery in consumer spending.
"It's very difficult to see light at the end of the tunnel at the moment," he said.
By Richard Tyler taken from http://www.telegraph.co.uk/finance/newsbysector/retailandconsumer/8604046/British-consumers-starting-to-ration-says-Asda-boss.html
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