Energy bills could hit more than £3,300 a year this winter in the latest blow to households struggling to cope with the rising cost of living.
Research firm Cornwall Insight has published new, higher forecasts which show the energy price cap is set to rise to £3,244 a year in October when it is next adjusted as wholesale prices continue to rise. The default rate cap is expected to be raised again in January to £3,363 a year, a significant increase on Cornwall Insight’s forecast of £3,003 just two weeks ago.
The cap, which is set quarterly by energy industry regulator Ofgem, is currently a record £1,971 a year.
“Energy customers are facing the prospect of a very expensive winter,” said Craig Lowery, principal consultant at Cornwall Insight. “As the energy market continues to grapple with global political and economic uncertainty, correspondingly high wholesale prices and the UK’s continued reliance on energy imports have once again seen default rate cap forecasts for domestic consumers rise to even more inaccessible levels.”
Cornwall Insight blamed continued uncertainty over Russian gas flows to mainland Europe, as well as more recent concerns such as the stalled strike by Norwegian gas workers, for fueling high wholesale prices, which are ultimately passed on to consumers.
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“There’s always some hope that the market will stabilize and pull back in time for the cap setting in January,” Lowery said. “However, with the October cap announcement just a month away, high wholesale prices are already being baked into the figure, with little hope of relief from projected high energy bills.”
Consumers are increasingly struggling with the rising cost of living – inflation is at a 40-year high – with half of Britons saying they bought less food than normal between June 22 and July 3, according to the Office for National Statistics.
Cornwall Insight’s latest forecasts do not include the impact of the government’s multibillion-dollar support package, including a £400 discount for every household in the country in October and a £150 discount on council tax bills. Vulnerable people are entitled to additional financial support.
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