Energy bills could reach more than £3,300 a year this winter in the latest blow to households struggling to cope with the soaring cost of living crisis.
The research firm Cornwall Insight published new, higher forecasts that show the energy price cap is on track to rise to £3,244 a year in October, when it is next adjusted, as wholesale prices continue to soar. The default tariff cap is expected to be raised again in January, to £3,363 a year, up significantly from the £3,003 Cornwall Insight forecast just two weeks ago.
The cap, which is set quarterly by the energy industry regulator, Ofgem, is currently at a record £1,971 a year.
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“Energy consumers are facing the prospect of a very expensive winter,” Craig Lowery, a principal consultant at Cornwall Insight, said. “As the energy market continues to grapple with global political and economic uncertainty, the corresponding high wholesale prices, and the UK’s continued reliance on energy imports has once again seen predictions for the domestic consumer default tariff cap to rise to what are even more unaffordable levels.”
Cornwall Insight blamed ongoing uncertainty regarding Russian gas flows into continental Europe, as well as more recent concerns such as the halted strike by Norwegian gas workers, for fuelling high wholesale prices that are ultimately passed on to consumers.
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“There is always some hope that the market will stabilise and retreat in time for the setting of the January cap,” Lowery said. “However, with the announcement of the October cap only a month away, the high wholesale prices are already being ‘baked in’ to the figure, with little hope of relief from the predicted high energy bills.”
Consumers are increasingly struggling with the soaring cost of living – inflation is running at a 40-year high – with half of British people saying they bought less food than normal between 22 June and 3 July, according to the Office for National Statistics.
Cornwall Insight’s latest forecasts do not include the impact of the government’s multibillion-pound package of support, including a £400 discount for every household in the country in October, and a £150 rebate from council tax bills. Vulnerable people are entitled to further financial support.
