Households across Great Britain face a significant increase in energy costs early next year. Projections from the consultancy Cornwall Insight suggest that the average annual dual-fuel bill is set to rise by £276, pushing the typical household cost to £1,999 starting in January. This 16% hike marks the most substantial quarterly increase recorded since January 2023, surpassing previous estimates of a 9% rise. Household energy bills in Great Britain are predicted to soar by £276 a year for the typical household from January as the impact of the Middle East war continues through the coldest months of winter. The government’s cap on energy prices is poised to jump by 16% to the equivalent of £1,999 for the average annual dual-fuel bill in a further blow to struggling households, according to figures from the leading forecaste. With analysts blaming the uptick on the recent rise in gas market prices to three-year highs, the increase for the January to March period is well above the consultancy’s previous prediction of a 9% rise. When the energy crisis that followed the full-scale invasion of Ukraine a year earlier was at its height, it would be the biggest quarterly jump since January 2023.
The sharp upward revision is driven by a surge in global gas market prices, which have hit three-year highs. Europe is currently entering the colder months with gas reserves at their lowest point in 13 years, a situation exacerbated by the US-Israel conflict with Iran. This regional instability has led to a doubling of European gas prices, while ongoing threats to shipping tankers in the Hormuz and Bab al-Mandab straits have further restricted oil and gas exports from the Gulf.
Craig Lowrey, principal consultant at Cornwall Insight, warned that the spike would create severe financial pressure for families. He noted that the January timing is particularly difficult for consumers, as many are still navigating the aftereffects of holiday spending while contending with peak winter heating requirements.
This expected January surge follows an immediate, separate increase taking effect this Thursday. Ofgem, the national energy regulator, is implementing a 4% rise in the quarterly price cap, bringing costs to their highest level in three years. Under these new rates, the unit cost for electricity will climb to 26.32p per kilowatt hour, while gas charges will increase to 7.97p. These adjustments result in an annual average cost of £1,723, though final bills will ultimately fluctuate based on individual household consumption.
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