The UK’s energy price cap will rise 10% in October, the steepest increase since 2022, pushing up bills for millions of homes just as the winter heating season begins.
The level, set every three months by the regulator Ofgem, will increase to GBP1,717 ($2,944.75) from Oct 1, according to figures published on Friday.
Chancellor of the Exchequer Rachel Reeves is likely to face criticism as the bill increase coincides with new rules limiting the number of pensioners eligible for heating subsidies in winter.
Rates are expected to increase again in January, according to Cornwall Insight.
That would mean two consecutive hikes — making it even harder for the new government to fulfill the election promise to lower bills. Soaring energy tariffs have been a driver of inflation and the cost of living crisis in Britain, a key issue for voters in the July General Election.
Prime Minister Keir Starmer has presented the new state-owned energy company, Great British Energy, as a solution for lowering bills by investing in renewable energy supply. But, building new infrastructure isn’t a quick fix and it could take years for the benefit to be felt.
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The Bank of England expects inflation to accelerate this year. After falling to the 2% target over the summer, it is now forecast by BOE to reach 2.7% by the end of 2024 before easing again.
Energy poverty charities have been sounding the alarm since Reeves announced that some pensioners will miss out on a subsidy known as the Winter Fuel Payment, with only those on means-tested benefits being able to claim.
A report from influential charity Citizens Advice found that a 10% increase in the price cap would mean an estimated 25% of UK residents would consider turning off their heating and hot water this winter. Debt levels among customers are still at record levels according to Ofgem, despite bills dropping from the peaks seen during the energy crisis.
The Ofgem price cap, which represents an annual bill for a typical household, is largely a reflection of wholesale power and gas prices. The latest increase is mostly due to global dynamics in gas markets linked to geopolitical risks in the Middle East. UK gas futures have increased more than 8% since the previous price cap came into force on July 1.
