UK household energy bills are forecast to rise sharply from July, with consultancy Cornwall Insight predicting the annual energy price cap will increase by £209 to around £1,850 for a typical dual-fuel household.
The projected rise would represent an increase of roughly 13% from the current annual level of £1,641 under the existing cap set by Ofgem.
According to Cornwall Insight, the main driver behind the increase is the surge in wholesale energy prices following the escalation of conflict involving Iran earlier this year.
Missile strikes and retaliatory attacks across Gulf energy infrastructure, alongside disruption to shipping through the Strait of Hormuz, pushed oil and gas prices sharply higher during February and March.
Although a temporary ceasefire has helped stabilise markets, wholesale energy prices remain significantly elevated, leaving the projected July cap more than £200 above current levels.
Cornwall Insight warned that while the impact may be less severe during the summer months due to lower household energy usage, concerns are growing about the outlook for winter bills.
The consultancy said current forecasts suggest October’s price cap could remain close to July’s level as demand increases later in the year.
Analysts added that even if tensions in the Middle East eased quickly, lasting damage to infrastructure and ongoing supply disruption mean a return to the lower energy prices seen earlier this year appears unlikely in the near term.
Separately, Ofgem is consulting on changes to its definition of a “typical household” to reflect declining average energy consumption across the UK.
