Household finances grew worse during month

One in four people said their household finances had worsened during the month, compared with just 6 per cent who said they had improved, according to financial information firm Markit and research group YouGov.

Nearly 60 per cent said they had seen an increase in the cost of goods and services in February, with low income groups and older people most likely to have experienced price hikes.

At the same time, pay levels for both public and private sector workers remained stagnant during the month.

Tim Moore, economist at Markit, said: "February's survey highlights that UK household finances are still deteriorating, despite the recession officially ending last year.

"This mostly reflected a combination of stalling incomes and rising inflation perceptions."

He added that with household spending falling again, the latest data suggests weak domestic demand could limit the recovery in the wider economy.

Around 34 per cent of people expected their finances to worsen in the coming year, compared with 26 per cent who thought they would improve.

But the figure was an improvement on February 2009, when nearly half of people felt pessimistic about their finances going forward.

Concerns over job security continued in February, particularly for people in the construction sector, as well as those working in education, health and social services.

However, private sector job security fell at its slowest rate since the survey first began in February last year.

The research also found people thought the Conservatives would be most likely to improve their finances if they were elected at 27 per cent, with 21 per cent favouring Labour and 8 per cent expecting the Liberal Democrats to give them the biggest boost.

Some people also thought that it would be beneficial to have continuity in economic policy during the recovery.