The energy price cap is to rise to an average annual £1,928 from January, the sector’s regulator has announced.
Ofgem said a typical household paying by direct debit for gas and electricity faces forking out 5% more when compared to the annual cap figure covering September to December, which equates to £94 more over the course of a year.
The new average figure largely reflects higher wholesale costs heading in to the cold winter months and also includes a shift in Ofgem’s cap calculation based on average domestic energy use.
The increase, while widely expected, leaves households facing the prospect of further pressure on their finances in the new year.
While the rate of inflation has fallen back from the energy-led peak above 11% in the wake of Russia’s invasion of Ukraine, the pace of price growth in the economy remains high.
The cost of living crisis has evolved to include hits from efforts to get inflation down as interest rate rises are felt in mortgages and rents.
A lack of universal support for energy bills this winter reflects the fact that wholesale prices have recovered composure after last year’s rush for natural gas across Europe.
However, they remain elevated and the price cap is still more than £1,000 above the pre-pandemic average.
