The number of households who say they’re struggling has risen by just over 340,000 at the end of July 2012 compared to the middle of 2011.
But the average shortfall nationwide has halved to £42 per month compared to an average of £96 in January.
The number of stable households, those who say they have some money left after paying bills each month, has fallen by 600,000.
Mark Gregory, Legal & General executive director savings, said: “The continued economic recession appears to be gradually squeezing household income with more homes struggling to stay out of debt this year.
“However, the good news is that lower inflation and falling costs of utilities, fuel and food since the start of this year has helped the less well off households to cope better with paying bills and debt.”
Homes in London, the Midlands, Yorkshire and the North West appear to have benefited the most with the biggest reduction in monthly shortfalls compared to the national average.
Despite the lower figure for July London has again recorded the highest monthly shortfall at £99 per month down from £261 in January.
