Energy bills to rise in January

Households in Britain will pay more for gas and electricity from the new year after the energy price cap was increased.

Energy regulator Ofgem said that the typical annual bill would go up by £94, or 5%, from £1,834 to £1,928.

Covering January to March 2024, this price increase largely reflects higher wholesale costs for gas and electricity due to market instability and global events, particularly the war in Ukraine.

The price cap applies to around 29 million households in England, Scotland and Wales on default or variable rates.

Ofgem chief executive Jonathan Brearley acknowledged that the rise in bills would be “worrying” for many people, coming at a difficult time. Suppliers are expected to identify and offer help to those who are struggling with their bills.

Brearley added that customers may benefit from switching deals or suppliers.

“People should weigh up all the information, seek independent advice from trusted sources and consider what is most important for them whether that’s the lowest price or the security of a fixed deal,” he said.

Analysts have predicted that energy prices will come down again in March.

UK inflation could hit 18% next year, Citigroup warns

Soaring energy bills will drive UK inflation over 18% in early 2023, according to Citigroup.

A new forecast from the investment bank says that UK inflation is on course to reach 18.6% in January — the highest peak in almost 50 years — because of the continued rise in wholesale gas and electricity prices.

Citi predicts that the price cap on energy bills will increase from £1,971 to £3,717 in October, and then jump to £4,567 in January and £5,816 in April.

This would put intense pressure on household incomes and further push the UK economy into recession.

CPI inflation stood at 10.1% in July, a 40-year high.

If inflation reaches 18%, it would be higher than the peak after the second Opec oil shock of 1979 when CPI inflation reached 17.8%, the Financial Times reported.

Benjamin Nabarro, chief UK economist at Citi, said the bank’s forecast took account of a 25% increase in wholesale gas prices last week and a 7% rise in wholesale electricity prices.

The Bank of England has forecast that inflation will peak at 13.3% in October and will start to fall next year.