Household energy bills in the UK are expected to increase by almost £300 a year from July, as rising wholesale costs linked to the Iran conflict push prices higher, analysts have warned.
According to Cornwall Insight, Ofgem’s price cap for July to September is projected to reach £1,929 for a typical dual-fuel household. This represents an increase of £288, or 18%, compared with April’s cap.
The latest forecast marks a slight drop from earlier estimates of £1,973, reflecting a temporary stabilisation in wholesale energy markets following a pause in strikes on infrastructure and signals of a possible ceasefire in the Middle East. However, analysts say a rise in July remains “effectively unavoidable” due to sharp increases in wholesale prices recorded in March.
Energy bills had fallen by 7% from April 1, reducing the typical annual cost to £1,641. This drop followed the UK Government’s decision to remove green levies, which it said would cut average bills by around £150.
Despite this short-term relief, ministers are now considering further support for vulnerable households as the likelihood of a summer price surge grows. Ofgem is due to confirm the next price cap level on 27 May.
Craig Lowrey, principal consultant at Cornwall Insight, said while the timing of the increase may lessen the immediate impact due to lower summer demand, continued high wholesale prices could lead to even greater pressure later in the year. He warned that the October price cap could prove more significant if current trends persist.
Energy consumers minister Martin McCluskey said tackling rising living costs remains a top priority, adding that the government is prepared to intervene if necessary.
Meanwhile, Conservative shadow energy secretary Claire Coutinho criticised current energy policy, arguing that reducing domestic energy production risks increasing costs further. She called for alternative measures to cut bills, including removing taxes and levies on energy.
With global energy markets remaining volatile, households across the UK are likely to face renewed pressure on their finances in the months ahead.