Energy bills forecast to fall by 7% in the summer
Leading industry analysts anticipate a reduction in the price cap for average household energy bills this summer to £1574 annually, down by 7% from the current £1690 level, according to Cornwall Insights. Ofgem is set to announce the new price cap for the July to September quarter, with Cornwall Insight’s forecast suggesting a potential decrease of around 25% in gas and electricity bills over the course of a year, translating to savings of approximately £500 since July 2023.
The recent 12% reduction in the cap to £1690 from April is expected to contribute to a significant decline in the rate of inflation for the month, with potential for it to even reach the Bank of England’s target rate of 2%. Despite these positive developments, concerns persist regarding the affordability of energy bills for households, as they still remain significantly higher than pre-crisis levels.
While the price cap is anticipated to experience a slight increase in October for the Autumn quarter before declining again in January 2025, recent market fluctuations in gas and electricity prices have led to adjustments in predictions. Cornwall Insights emphasizes the interplay of short-term market factors like weather and supply availability, alongside longer-term drivers such as geopolitical concerns and elevated oil prices.
Ofgem’s commitment to a comprehensive review of the cap and its structure earlier this year signals potential for reforms aimed at achieving fairer and more efficient energy bills. Dr. Craig Lowrey, Principal Consultant at Cornwall Insight, underscores the broader trend of declines in energy bills, despite minor changes to the cap, and highlights the importance of finding the right balance in energy pricing reforms to address the diverse needs of consumers.
Richard Neudegg, director of regulation at comparison site Uswitch.com, emphasizes the importance of households exploring fixed tariffs for price certainty amid ongoing fluctuations in the price cap, with many options available that offer rates below the predicted July rates. As the energy landscape continues to evolve, energy bills remain a subject of ongoing debate and transformation, particularly with a general election on the horizon.
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