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Consumers' confidence in their household's financial situation has grown to its highest levels in at least four years, according to a report.

The Lloyds Spending Power Report, which started in early 2011, said that the a positive swing in sentiment took its overall index to a new all-time high reading of 158 points in March.

People's confidence in their current personal financial situation improved, while sentiment towards their household financial situation lifted to the highest levels the report had ever recorded.

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Consumers' views about the country's financial situation and the employment market are also growing more positive, the index found. Meanwhile, the proportion of people with some disposable income left over in March after living costs were taken into account increased by one percentage point from the previous month, to reach 79%.

Lloyds said that consumers' spending on essentials continued to fall in March, but the decrease has slowed from previous months. This slowing down was mainly caused by a growth in food spending as people stocked up for Easter, the report said.

Overall, the report said that essential spending growth is still being held down by lower gas and electricity spending as well as lower fuel spending compared with last year, although more consumers are starting to say they are spending more at the fuel pumps.

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The latest research found that more than one in five (21%) people surveyed in March think they will have much more or more money in six months' time, when all household bills and essentials have been paid. This is unchanged from February.

One in three (34%) people who expect to have more money in six months' time said they will use it to pay off more debt, while seven in 10 (70%) of these people said they plan to save more.

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Office for National Statistics (ONS) figures recently showed that Inflation turned slightly negative in March. Officially the Consumer Price Index (CPI) measure of inflation remained at zero, the same as in February, but calculated to two decimal places it slipped from plus 0.03% to minus 0.01%. Economists have predicted it could fall further in coming months.

Meanwhile, regular outgoings such as mortgage payments are being kept relatively affordable amid strong competition from lenders to offer cheap rates.

Patrick Foley, chief economist at Lloyds Bank, said: "As a stronger economic backdrop continues to develop, consumers are becoming more confident in both their own financial situation and the country's.

"And while political uncertainty looks likely to rise following the general election, household sentiment should be supported by the modest pick-up in wage growth that seems to be unfolding. This suggests the UK's economic prospects remain bright."

The report asks more than 2,000 people across the UK about their current and future spending habits.