Experts warn bills could climb even higher this winter
Households have been warned to make a crucial change now as wholesale gas prices jump 42% and experts fear another painful rise in bills this winter
Families looking to shield themselves from soaring energy bills have been hit by a fresh blow after the cost of the cheapest fixed tariff rocketed by £111 in just two weeks. New analysis shows the best fixed deal on the market has climbed from £1,424 a year to £1,535 since the middle of July – an increase of almost 8%.
The rise comes as wholesale UK gas prices have surged 42% over the past month, driven by renewed instability in the Middle East, raising fears that households face another expensive winter. Suppliers are already warning that Ofgem’s energy price cap could rise by 5.8% in October to around £1,760, with forecasts suggesting bills could climb as high as £1,865 from January.
Despite the recent increases, fixing is still cheaper than remaining on the current £1,663 price cap. The cheapest fixed tariff is still around £128 a year lower than the current cap, although the savings have narrowed sharply as suppliers respond to rising wholesale costs.
Cheapest fixed deals
Supplier Annual bill Saving vs price cap
Outfox Energy £1,535 £128
Fuse Energy £1,594 £69
Outfox Energy £1,609 £54
E.ON Next £1,612 £51
Fuse Energy £1,618 £45
*Source: Uswitch. Prices correct on July 27. Typical annual dual-fuel bills.
The spike follows weeks of tension in the Gulf, which has pushed up the wholesale price suppliers pay for gas months before it reaches homes. Those higher costs are now feeding through into the retail market, with analysts warning that waiting for prices to fall could prove costly.
If October forecasts prove correct, it would mark the highest winter energy price cap since the Government’s Energy Price Guarantee ended following the energy crisis. There is one piece of relief on the horizon. From October, VAT will be removed from domestic electricity bills until March, saving a typical household around £45 over a year.
However, the measure applies only to electricity, not gas, meaning many households that rely on gas central heating could still see overall bills rise if wholesale prices remain elevated.
Sabrina Hoque, energy expert at Uswitch, said: “Wholesale gas prices have risen sharply over the past month, and we’re already seeing that filter through into the fixed tariff market – the cheapest deal available today is £111 more expensive than it was just two weeks ago.
“Suppliers are already warning there could be a bigger jump in the price cap in October, with another rise to follow in January. That’s a reminder that, for those on standard tariffs, the energy market is turbulent and getting off the price cap should be a priority.
“Households who’ve been putting off switching are leaving savings on the table. Don’t wait until you turn the heating on to find out what winter is going to cost you. Fixing your rates now still beats sticking on the price cap, and it’s the only way to know exactly what you’ll pay through the cold months. Run a comparison to see your options.”
The direction of wholesale gas prices over the coming weeks will be crucial in determining whether suppliers continue to increase the cost of fixed tariffs before winter.
