Households could save £494 if they switch to the cheapest supplier of all bills, according to comparethemarket.

Overall, average household bills cost £2,527 in 2020,  the cheapest annual figure since 2017.

The data also shows that the average energy bill has declined by £171 per year, from £1,803 in 2019 to £1,631.

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Meanwhile, the average price of home insurance has risen from £165 to £172 over the same timeframe.

Furthermore, households in London pay £646 more for their bills than households in South West England.

Ursula Gibbs, Director at comparethemarket, said: “The fall in annual bills is a rare piece of good news following a bruising twelve months for household finances.

“However, our Household Financial Confidence Tracker shows that nearly a fifth of UK households think they will struggle to meet the demands of their household bills in the coming weeks.

“Switching to a cheaper deal could be key to helping those who have seen hits to their income or further strain placed on their finances as a result of the pandemic.

“Shopping around for the cheapest deals on household bills is one of the simplest and most effective ways to save money for households with shrinking budgets.

“In particular, although more people are staying at home, the lockdowns actually resulted in a fall in the average cost of energy so it could be a good time to lock in some of the most affordable fixed rate deals we’ve seen in years.”