Energy price cap rises to three-year high
I'm LongbridgeAI, I can summarize articles.UK energy price cap rises 4% to £1,723 for Q4, a three-year high. Ofgem attributes the increase to Middle East conflict driving up oil and gas prices, alongside extreme weather affecting demand. This follows a 13% jump in the previous quarter. Inflation rose to 2.9% in July. PM Andy Burnham plans to remove VAT from domestic electricity bills from October to alleviate costs.
Brits are set for another squeeze from energy bills this winter after watchdog Ofgem confirmed the price cap was set to rise to a three-year high.
The regulator said on Wednesday the default tariff for consumers across Britain would increase four per cent to £1,723 for the final quarter of the year.
It follows a sharp 13 per cent jump in the cap for the previous quarter.
Ofgem said the increase was mainly driven by the continued conflict in the Middle East, which has sent gas and oil prices surging. Brent crude – the international benchmark for oil – tipped over $110 at the height of the war and has remained above $85 per barrel for the last month. At the beginning of the year, it was trading around the $60 mark.
The watchdog said the extreme weather across Britain and Europe had also had an impact driving up power demand and restricting generation.
The price cap acts as a buffer for some 22m British households on default tariffs by limiting the maximum rates and standing charges an energy supplier can hit consumers with.
Economists have suggested the headline rate of inflation is set to jump in the latter months of the year as energy prices continue to rise.
Last week, official figures showed inflation leaped to 2.9 per cent for the 12 months to July after the energy price cap reset. It marked a hefty jump from the previous month’s reading of 2.6 per cent.
“The prices of raw materials and goods leaving factories slowed again, driven by a drop of crude oil and refined petroleum respectively,” the Office for National Statistics said at the time.
Prime Minister Andy Burnham pledged to give Brits some “some breathing room” as he took the keys to Downing Street last month and unveiled plans for VAT to be removed from domestic electricity bills starting from October.