Energy price cap to remain above £3,500 until most of 2023, report warns | Business newsletter

The energy price cap will remain above £3,500 a year through most of 2023, according to the latest dire projections for household bills.

The predictions, from energy consulting firm Cornwall Insight, come as families brace for the harshest winters in decades amid rising costs on almost every front. inflationary access levels not seen for 40 years.

The cost of living crisis – which was initially caused by demand outstripping supply as economies began to bounce back from COVID restrictions – gathered pace in April as price caps rose more than 50% to £1,971

People turn to appreciate meals – the latest cost of living.

Energy-driven inflation has increased by one gear, to spread throughout the global supply chain, since Russia’s War in Ukraine begins when a commodity group, including natural gas, increases in price.

Rising wholesale gas prices are a major cause of energy bill pain.

Cornwall Insight said on Wednesday, shortly after BP reveals bumper profits in the final quarter of the fiscal year, household energy bills are likely to remain at more than 2.5 times their pre-crisis levels through at least 2024.

It predicts that average bills will hit £3,359 a year from October and continue to rise until a peak of £3,729 from April 2023.

It will start to decline after that, but only slowly, reaching £3,569 from July before hitting £3,470 in the last three months of 2023.

The consulting firm explained that forecasts based on market trends have proven to be more severe recently due to concerns Russia will turn off the faucet to Germany via the Nord Stream 1 pipeline in retaliation for Western sanctions against Moscow.

It is currently pumping only at 20% of capacity, stoking fears across Europe that tight supply will lead to a squeeze during the high-demand winter months and eventually force sub-economies to Russia fell into recession.

EU countries are currently bound by a voluntary agreement to save 15% on gas to help preserve stockpiles.

The scramble for alternative supplies on the continent will certainly affect wholesale costs in the UK, even though the country is dependent on Russia for less than 5% of its annual gas supply.

UK wholesale costs are already around 30% below demand elsewhere in Northern Europe, but that spread is expected to decrease as the evenings roll in.

Recently National Grid .’s report little chance of turning off the lights in the UK this winter.

However, experts have warned that a major cold weather event could force measures, such as closing nonessential factories due to peak demand, to ensure homes can keep warm.

Craig Lowrey, principal advisor at Cornwall Insight, said: “We have less than a month left until new price caps are announced and given trends in the wholesale market and supply concerns. of Russia, unfortunately the only change to the prediction is possible up.

“While the increase in forecasts for October and January is an urgent concern, it is not just the extent and timing of the increases that have made these new forecasts so dire.

“While the government has pledged some support for the energy increase in October, our cap forecast has increased by more than £500 since the funding was proposed and it is true that it is £400. is committed to only scratching the surface of the matter.”

The package increased to £1,200 for the poorest households.

The matter has become an important battleground in Tory Leadership Race like Rishi Sunak, the former prime minister who signed the measures into law, or Liz Truss who will become prime minister ahead of the expected increase in the October price ceiling.

The charity National Energy Action predicted last month that 8.2 million UK households, or a third, would fall into fuel poverty if the average bill hit £3,250 a year. .