Energy bills for UK households are forecast to decline 7% starting in October, taking the typical annual bill below £2,000 ($2,543) for the first time in a year.
(Bloomberg) — Energy bills for UK households are forecast to decline 7% starting in October, taking the typical annual bill below £2,000 ($2,543) for the first time in a year.
Energy consultancy Cornwall Insight Ltd. predicts the typical tariff will drop to about £1,926 from the current £2,074 after a recent easing in wholesale gas and electricity costs. Ofgem is set to announce the new energy price cap, which determines the maximum tariffs suppliers can charge most households in Britain, on Aug. 25.
Even with the predicted decline, households will still pay significantly more for their power and gas than they did in 2021, before Russia’s invasion of Ukraine escalated the energy crisis.
Ofgem’s new cap will be £1,823, according to Cornwall Insight. But in calculating that, Ofgem has lowered the assumed consumption level for a typical household.
On a like-for-like basis, the incoming cap prediction equates to £1,926 per year, more than 50% above the rate in late 2021, the consultancy said.
“While a small decrease in October’s bills is to be welcomed, we once again see energy price forecasts far above pre-crisis levels, underscoring the limitations of the price cap as a tool for supporting households with their energy bills,” said Craig Lowrey, a principal consultant at Cornwall Insight.
Looking further ahead, the recent surge in gas prices across Europe, primarily because of strike threats at liquefied natural gas facilities in Australia, may prompt an increase to £2,083 in the January-March cap, according to the report.
Bank of England Chief Economist Huw Pill warned previously that an increase in gas prices may force policymakers to react if it substantially shifted the outlook for UK inflation.
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