People are being urged to consider moving onto a fixed tariff – ahead of an expected increase in energy bills this autumn. Locking in a cheaper tariff now could save UK householders a considerable sum, experts say.
It comes as forecasts predict the average direct debit is expected to go up by £155. Ofgem will announce the next price cap change on August 27 and it will be in place from October 1 to December 31, 2024.
The best course of action could be to see if you can lock in a fixed tariff now before prices start to climb. While the average bill has reduced in recent months, it’s set to rise as we head towards winter.
This time last year (the third quarter of 2023), the average annual household energy bill sat at £1,976. This cost has been largely in decline ever since and currently stands at £1,568 per year.
In fact, the average annual dual energy bill has reduced by 7.2 per cent or £122 in the last quarter alone and is now some 20.6 per cent below this time last year – an annual drop of £408.
This means that households are finally benefiting from more affordable gas and electricity costs after the prolonged cost of living crisis and, as it stands, the current energy price cap and average bill of £1,568 equates to 4 per cent of the average household income. But financial analysts at RIFT say this respite isn’t set to last for long.
Forecasts say the energy price cap and average annual dual-fuel energy bill are forecast to climb to £1,723 during the final three months of this year as we head into winter. And while this is still below the high cost of £1,976 seen this time last year, it will mark a 9.9 per cent increase compared to the current cost of running a home, adding £155 to the average household’s energy bill over a year, reports BirminghamLive
As a result, RIFT forecasts that the proportion of household income required to run a home will climb to 4.4 per cent, when adjusting earnings for inflation.
Bradley Post, MD of RIFT, said: “The cost of living crisis has been a prolonged thorn in the side of the nation’s households and high energy bills have been one of the contributing factors in this. So many households may have finally been able to breathe a sigh of relief having seen a reduction in their tariff in recent months. Unfortunately, this respite isn’t set to last and energy bills are set to climb once again come the end of summer.
“Whilst this increase may not be as dramatic, it could still place pressure on those households in the toughest financial spots and so the best course of action is to see if you can lock in a fixed tariff now before prices start to climb.”
Analysts at Cornwall Insight confirmed that their forecasts for the October-December 2024 price cap have dropped to £1,723 a year for a typical dual fuel consumer, a reduction of nearly £40 annually compared with its predictions issued in May.
Despite the drop in the prediction, this cap level would still represent a 10 per cent increase from the £1,568 a year cap taking effect on July 1. Cornwall Insight explained: “An uptick in the wholesale market is the central reason behind the predicted rise in October, with geopolitical concerns and supply-demand pressures having a resultant impact on the cap.”
Ofgem will announce the next price cap change on August 27 and it will be in place from October 1 to December 31, 2024. The January-March cap is currently anticipated to be at a similar level to October.
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