Energy bills are still set to rise nearly £300 in the Summer, a leading forecaster has warned, as conflict in the Middle East continues to hit the UK’s economy.
Cornwall Insight has predicted Ofgem’s July price cap will rise to £1,934 from the £1,641 April cap – a rise of nearly £300. The respected consultancy has lowered their estimate slightly from last week, when they put it at £1,973.
This would bring the price cap to the highest rate since July 2023, which came after the record rises seen in the first year of Russia’s invasion of Ukraine.
Wholesale gas prices have more than doubled since the US launched strikes on Iran at the end of February, with further rises expected. The rate is a major influence on energy costs in the UK and the level at which Ofgem sets its energy price cap.
The forecast comes just a day before the new, lower price cap is set to come into effect.
Minister for energy consumers Martin McCluskey said: “Action taken by this government on bills will see the energy price cap coming down from tomorrow. This reduction is fixed until the end of June, protecting millions of households with lower bills this spring.”
The figure for April to June was set in February, meaning bills are effectively protected until July. The energy regulator announced a seven per cent, or £117, reduction to the figure, broadly in line with Labour’s pledge to cut energy bills by £150 from the start of the new financial year through scrapping an energy efficiency scheme.
Mr McCluskey added: “Tackling the affordability crisis is our number one priority and I know many families will be thinking about how events in the Middle East might impact the cost of living at home.
“We will continue to fight people’s corner through this crisis and, as the Energy Secretary has said, if it’s necessary to intervene, we will.”
Blasts continue to be reported across the Middle East, as America and Israel exchange strikes with Iran. As fighting escalates, Iran has warned that the Strait of Hormuz is “closed”, warning that any transit through the waterway will face “harsh measures”.
The strait provides the only passage from the Persian Gulf to the open ocean, making it a crucial point for the oil industry. Around 20 per cent of the world’s gas and oil is shipped through the waterway, with the Iranian threat proving highly damaging for global trade.
Donald Trump initially set a deadline of 23 March for Iran to reopen Hormuz, threatening to “obliterate” the country’s power plants if they did not comply.
However, last week the US president extended to 6 April in light of “good and productive” talks, which Iran denies took place.
