'More families' covering bills

Easing inflation may have triggered the small recovery in household finances, the Legal and General Money Mood Survey said.

Households were typically £96 short a month, rising to £261 in London but dropping to £25 in the North East and East Anglia.

But they were managing to save £93 monthly on average, rising to £177 in the East Midlands and falling to around £34 in Yorkshire and the Humber.

Across Britain, one in 10 households said they were "struggling" and failing to cover their living costs, during the survey carried out last month, a slight drop from 11% when a similar study was carried out in September last year.

Just over half (51%) of households said they were "surviving" by covering their budgets and debts with nothing left to spare, up from 44% in September.

But the proportion of families who said their finances were "stable", with some cash left over, dropped to 39%, from 45% last autumn, as more people moved into the "surviving" category.

Mark Gregory, Legal and General executive director, said: "Perhaps the combined effect of lower inflation and costs of utilities and food starting to fall is producing some green shoots of recovery in household finances."

Families have faced high living costs and soaring fuel bills, and analysts believe worsening employment conditions will add to the pressure on household budgets, despite signs of inflation beginning to ease.

Analysts have highlighted a general trend towards consumers trying to pay down their debts and a lack of appetite to take out more credit.