A New Blow To Household Budgets
Household energy bills in Great Britain could rise by more than £200 a year from this summer, adding fresh pressure to millions of families already struggling with the cost of living crisis.
According to analysis from energy consultancy Cornwall Insight, a typical gas and electricity bill is forecast to rise to the equivalent of £1,850 a year from July under Ofgem’s quarterly price cap. That would be nearly 13% higher than the current £1,641 cap for April to June.
Wholesale Prices Drive The Increase
The expected increase is mainly being driven by higher wholesale energy prices. UK gas market prices doubled earlier this year after the Iran war disrupted global energy supplies and the Strait of Hormuz was effectively closed.
Ofgem sets the maximum price suppliers can charge for each unit of gas and electricity based on the cost of supplying energy to homes. That calculation includes average wholesale market costs in the months leading up to each new price cap period.
Ceasefire Relief Has Been Limited
A temporary ceasefire helped energy markets retreat from the historic highs reached in March, when Cornwall estimated the price cap could rise to almost £2,000 a year. However, prices remain much higher than normal.
That leaves households facing another increase at a time when other essential costs, including council tax and water bills, are also rising. The July cap may be painful, but analysts warn the bigger concern could come in October, when colder weather typically pushes energy use higher.
Autumn Bills Remain A Major Risk
Cornwall warned that even if the Iran war ended immediately, the physical damage to infrastructure and the lingering effect of disrupted supply mean a return to April’s price cap levels by autumn is unlikely.
Craig Lowrey, principal consultant at Cornwall, said that if the cap remains around July’s level into autumn, the government will need to consider targeted support for the most vulnerable households.
Government Faces Pressure To Act
Keir Starmer has postponed the planned 5p rise in fuel duty for the rest of the year, while Chancellor Rachel Reeves is expected to announce further measures aimed at easing the rising cost of living.
A government spokesperson said tackling affordability is the top priority and argued that the latest fossil fuel crisis shows the UK must move away from exposure to volatile global energy markets and toward clean domestic power.
Renewables And Fixed Deals In Focus
Energy campaigners argue that the long-term solution is faster deployment of renewable power and better home insulation. Danny Gross of Friends of the Earth said another rise in bills would be a serious blow for households and called for clean, homegrown energy to reduce dependence on fossil fuels.
In the short term, switching sites have advised households to consider fixed-rate energy deals. Some fixed tariffs currently undercut the predicted July price cap, according to uSwitch, which means households may be able to reduce summer costs and potentially protect themselves against further increases in winter.
