The price cap on most UK homes’ energy bills will climb this winter, according to regulator Ofgem, escalating a cost-of-living problem that is expected to deepen.
Bills will rise in January due to rising wholesale energy prices caused by Russia’s war in Ukraine, according to a statement from Ofgem.
The annual amount suppliers can charge a typical home for electricity and gas will rise from £1,834 to £1,928 ($2,418).
“This is a difficult time for many people, and any increase in bills will be worrying,” noted Ofgem chief executive Jonathan Brearley.
Consumer Price Index inflation fell drastically to 4.6 percent last month, meeting Conservative Prime Minister Rishi Sunak’s objective of halving the crucial metric.
However, when the government eliminated last year’s costly subsidies, people and companies continued to pay high energy bills, while food price inflation remained in the double digits.
The Office for Budget Responsibility warned on Wednesday, following a budget update from Finance Minister Jeremy Hunt, that Britons could suffer a record decrease in living standards in 2024–2025.
According to the fiscal watchdog, actual household disposable income per person will fall by the most since records began in the 1950s. It will not recover to pre-pandemic levels until 2027–2028.
The Chancellor of the Exchequer Hunt admitted Thursday that many families were still suffering.
“People are feeling under pressure because of all the increases in inflation, shopping baskets, and filling up the tank,” Hunt told BBC radio.
“We need to continue on the path of bringing inflation down.”
Hunt unveiled measures on Wednesday to boost growth and entice voters ahead of the next general election, promising a large pay boost for workers while expecting drastically weaker growth and stubbornly high inflation.
The most eye-catching tax decrease was a revamp of national insurance, a payroll tax paid by individuals and companies that would be reduced beginning in January.
The OBR, on the other hand, reduced economic growth predictions to 0.7 percent in 2024 and 1.4 percent in 2025. This compares to previous guidance of 1.8 and 2.5 percent, respectively.
Inflation will not fall below the Bank of England’s official two-percentage-point target until the second quarter of 2025, according to the OBR.
This is a year later than expected, raising the risk that interest rates will remain higher for longer, increasing the cost of commercial loans for consumers and businesses.