Britons less gloomy about finances as inflation falls

An official London 2012 shop is pictured in St Pancras International Station in London, July 22, 2012

LONDON (Reuters) - Britons are taking the least pessimistic view on their future finances in more than two years this month thanks to sliding inflation, a survey showed, fuelling hopes that consumers may have more money left to spend and support the ailing economy.

The headline Household Finance Index ticked up to 37.5 this month from 37.0 in June, survey compiler Markit said on Monday, hitting its highest since March, but remained below the 50 level that would mark no change in finances compared with a month ago.

Households reported overall the slowest drop in cash availability for 19 months, Markit said.

Overall, consumers' took the least downbeat view of their future finances since April 2010, though 43 percent said they expected their financial situation to worsen over the next 12 months.

Inflation tumbled to 2.4 percent in June as shops slashed prices for clothing in early summer sales and is now well off the high of 5.2 percent hit in September.

Many Britons have suffered a severe squeeze of their budgets as soaring prices have eaten up meagre wage rises. High unemployment and dire news from the recession-hit economy have also been weighing on consumers' morale and willingness to spend.

"Inflation has fallen more quickly than expected over the summer, but this is cold comfort for many households given continuing weak pay trends," Markit economist Tim Moore said.

"Job insecurities and lower incomes are crimping underlying consumer demand, which adds to recent gloom over the wider UK economic outlook," he said.

The survey showed that more Britons grew worried about their job security, Markit said. London was bucking the trend, most likely reflecting the increased hiring related to the Olympics.

(Reporting by Sven Egenter; Editing by Hugh Lawson)