Energy bills to fall at last for 27 million as Ofgem announces new price cap
Ofgem has announced the new energy price cap will be £2,074, based on typical use, from July 1. It means around 27 million households are set for a modest drop in energy bills this summer.
The Ofgem price cap is currently at £3,280, but consumers are protected from this by the Government’s energy price guarantee, meaning a typical household pays £2,500 a year.
This means with the new Ofgem cap coming in from July, bills will fall by £426 a year, based on typical use.
The news comes after the latest figures for inflation were released yesterday, which showed the overall rise in prices has eased, falling from 10.1 percent to 8.7 percent.
Analysts have warned many Britons will still struggle to pay their bills as high prices will remain for quite some time.
Sarah Pennells, consumer finance specialist at Royal London, said: “Energy prices are finally falling, but cost pressures continue to bubble elsewhere in the economy.
“Families are still grappling with an enormous spike in food prices, and interest rates may rise again in the months ahead. The cost of living crisis is by no means over.”
Energy bills increased in April when the instalments from the £400 energy bills discount came to an end.
Many other household bills also increased from April, including water bills, council tax, mobile and broadband.
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Alice Haine, personal finance analyst at Bestinvest, warned Britons still have high household bills despite the energy bills drop coming up in July.
She said: “Remember, lower energy prices do not translate into lower household bills across the board.
“While the good news is that more households won’t have shiver their way through the next winter, they may be forced to starve through the summer instead thanks to rocketing food prices.
“The reality of the never-ending financial squeeze is that it gives with one hand and takes with the other, with the lower energy price cap coming just a day after food inflation hit 19.1 percent in the 12 months to April, just slightly down on the 19.2 percent recorded in March.”
She also warned Britons not to be careful about how they use their appliances even with bills set to fall.
The expert said: “Households who see the lower price cap as the green light to plug in all their appliances and whack the heating up in the winter when the colder temperatures draw in should tread carefully.
“The cap is not a limit on the bill a household can be charged, it is purely the maximum amount a household with a typical usage would pay if they were on the standard default tariff.
“Ultimately what households are charged depends on how much energy they use, so those consuming more energy than the average will pay higher bills and those using less will pay less.”
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