UK energy bills set to rise again as October price cap forecast hits three-year high
Analysts forecast a 4% rise in Britain's October energy price cap to £1,729, a three-year high, as wholesale costs surge.
British households are bracing for another increase in energy costs this autumn, with analysts predicting the regulator's price cap will climb to its highest level in three years.
Cornwall Insight, an energy consultancy, forecasts that Ofgem's cap for a typical dual-fuel household will rise to £1,729 per year in October. That marks an increase of £66, or roughly 4%, from the current level of £1,663 set in July.
The projected rise comes despite a planned government move to scrap a 5% tax on electricity bills from October 1. Analysts say the benefit of that tax cut will be wiped out by surging wholesale energy prices.
At the heart of the increase is instability in the Middle East. Cornwall Insight pointed to the ongoing U.S.-Iran conflict as a key driver, with wholesale prices for the coming winter having reached their highest level in almost four years.
Disruptions to shipping in the region and to liquefied natural gas exports from Qatar, one of the world's largest gas suppliers, have tightened global supply. At the same time, demand for power across Europe has climbed due to summer heatwaves, pushing international gas prices sharply higher.
Wholesale energy costs are the single largest component of Ofgem's price cap, which is recalculated every three months. The formula also accounts for network costs and environmental and social levies.
The latest forecast follows official data released on Wednesday showing that a previous rise in energy bills helped push British inflation to a four-month high in July.
Ofgem is expected to announce the new cap level by August 26, giving households a clearer picture of what to expect this winter.