UK households are bracing for higher energy costs from October, as the national price cap is set to rise by 2%. Ofgem, the energy regulator, confirmed that the cap will move to £1,755 from 1 October.
The increase comes at a time when household energy consumption typically spikes during winter, adding pressure on families already dealing with higher costs of living.
The rise is partly driven by new levies being introduced to fund support payments for vulnerable homes, while overall energy debt has climbed to unprecedented levels.
Ofgem raises price cap to £1,755 from October
The energy price cap, reviewed every three months by Ofgem, limits how much suppliers can charge households per unit of electricity and gas.
From October, the cap will climb to £1,755, leaving households and businesses facing costlier bills during the coldest months of the year.
The regulator pointed out that the adjustment was necessary as part of a wider plan to ensure the energy market remains sustainable.
While wholesale energy prices have eased compared to the crisis levels of 2022, additional charges to fund government schemes are being passed on to consumers.
Government policy reversals and new support measures
More than a year into office, Prime Minister Keir Starmer’s government has been under growing pressure to tackle high living costs. Inflation has recently hit an 18-month high, fuelled by rising costs for food, transport, and hospitality.
At the same time, UK borrowing costs are hovering near their highest point in almost three decades.
Earlier this year, the government reversed its decision to cut cold weather fuel payments for pensioners, after the policy drew widespread criticism.
The reversal highlighted the challenge of balancing fiscal restraint with public demand for relief from rising prices.
The government has also expanded the Warm Home Discount, which provides £150 to 2.7 million additional households.
This scheme is aimed at offsetting some of the pressure from higher winter energy bills, particularly for low-income families and pensioners.
Energy debt doubles to £4 billion in two years
Alongside higher costs, household energy debt has been mounting. Ofgem data shows that customer energy debt has doubled in just two years, reaching a record £4 billion.
This underscores the scale of financial stress many families face, as incomes struggle to keep pace with rising costs.
Consultancy firm Cornwall Insight has suggested that bills may ease slightly at the next review in January.
However, the current increase comes at a critical time when consumption peaks, and many families will still be adjusting to the additional burden.
Inflation, borrowing costs, and consumer impact
The 2% increase in October adds to a broader economic picture defined by stubborn inflation and high interest rates.
Soaring prices across essential goods and services have eroded purchasing power, while borrowing costs remain elevated.
This has made it more expensive for households to manage debt, and more difficult for businesses to access affordable credit.
The government’s efforts to stabilise the situation, including energy support and targeted discounts, reflect ongoing attempts to mitigate the immediate impact of rising costs.
Yet the rise in energy bills is set to test the resilience of households through the upcoming winter.
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