British households face higher energy bills starting July, averaging £1,862 annually. Ofgem raised the price cap by 13% due to increased wholesale gas prices from Middle East conflict. Analysts warn further increases if shipping disruptions persist through Strait of Hormuz.
The rise adds pressure on Prime Minister Keir Starmer as living costs continue to rise. Energy Minister Ed Miliband stated that easing household burdens is a priority, acknowledging the strain caused by pre-existing economic pressures and this crisis.
British gas prices are now 45% higher than before U.S. military action against Iran began on February 28, halting transit of LNG through the Strait of Hormuz. Consumer groups urge government to outline support for low-income households struggling with energy costs and debt repayment.
The government aims to reduce reliance on gas and boost renewable capacity like wind and solar power in the long term. In April, it shifted some levies to cut around £150 from average bills. However, the new cap is 46% higher than winter 2021/22 prices, before Russia’s invasion of Ukraine triggered global energy price spikes.
With unresolved Iran-U.S. tensions, Cornwall Insight forecasts the cap rising further to £1,899 by October. Britain’s economy has struggled for growth in recent years, and higher energy costs could dampen consumer confidence. Recent data shows Britons are least likely to make big purchases in 1.5 months, while shoppers buy fewer items and seek cheaper deals on food.
Bank of England expects consumer price inflation to reach about 4% by year-end. British inflation has been above the BoE’s 2% target for most of the past five years. Ofgem notes that people are using less gas and electricity, so its next typical household energy use figure will reflect this change.