British households are set to face another sharp rise in energy costs after Ofgem increased its household price cap by 13% following a surge in wholesale gas prices linked to conflict in the Middle East.
From July, average annual household energy bills are expected to rise to £1,862, up around £221 from the previous £1,641 cap covering April to June. The increase will affect millions of households on variable energy tariffs.
Analysts warned bills could climb even further if disruption to shipping through the Strait of Hormuz continues, as the route is critical for global liquefied natural gas supplies.
The rise adds fresh pressure on Prime Minister Keir Starmer’s government as households continue to struggle with the wider cost-of-living crisis.
UK Energy Secretary Ed Miliband described the increase as “deeply unwelcome news” and said the government remained focused on easing financial pressure on consumers.
Wholesale British gas prices are reported to be around 45% higher than before military escalation involving Iran earlier this year disrupted energy markets and raised fears over LNG shipments through the region.
Wholesale energy costs remain the biggest factor influencing Ofgem’s quarterly price cap calculations, alongside network charges and environmental levies. The cap limits the maximum amount suppliers can charge households for gas and electricity on standard variable tariffs.