UK household energy bills forecast to jump 25% in January
Bloomberg Economics says the war in Iran is pushing up wholesale gas and electricity prices, driving the forecast rise.
Published
UK household energy bills are expected to rise by about 25% in January, according to a forecast from Bloomberg Economics. The firm links the increase to the war in Iran, which has pushed up wholesale gas and electricity prices, adding to inflationary pressure across the wider economy.
The figure is far larger than the change regulators have approved so far. Ofgem, the UK energy regulator, raised the energy price cap by 4% for the October to December period, an increase it announced on 26 August. Bloomberg had also reported that energy bills rose 13% in July, a month in which UK inflation climbed to a four-month high.
A 25% rise would mark a sharp acceleration from those earlier increases. Traders in gilt markets are already pricing in four to five quarter-point interest rate rises through 2027, and Bank of England Governor Andrew Bailey has warned of the risk of second-round effects, where higher energy costs feed into wider price and wage pressures. Households already stretched by rising bills would face a further squeeze on real incomes if the forecast proves accurate, and anyone holding UK rate-sensitive assets is watching for signs of how large that squeeze becomes.