The UK’s energy regulator Ofgem has announced an increase to the energy price cap that will take effect at the beginning of October.
The increase will mean that the average household on dual fuel tariffs in Britain will face energy bills of £3,549 per year, a staggering jump in the price of gas and electricity, which could leave families up to £2000 worse off.
The anticipated increase comes amid a gas crisis in Europe due to the ongoing Russia-Ukraine war, inflationary costs in energy production, stretched supply chains, and a post-pandemic economic recovery that has created surging demand.
With the significant increase to household bills, a majority of British homeowners will have to pay substantially higher monthly direct debits. Millions of families will be technically classified as being in ‘fuel poverty’ which could cause a more profound economic impact and dampen consumer spending. Some independent studies have suggested that by April of next year, the annual energy bill could rise again to over £5500, creating more pressure on the government to take drastic action.
Following Britain’s post-pandemic recovery, the near record low unemployment figures have portrayed a different picture about the economic outlook, however the Bank of England recently predicted a recession in the coming two years that could last for several quarters. While hiring is slowing down in Britain, the biggest concern for citizens is how to pay for huge energy bills while salaries are falling below the rate of inflation.
Headline inflation, which peaked over 10% in July is forecast to go to 18% or further in the new year due to the impact of the energy price increase.
Source: Britain Daily