Energy bills will rise 13% from July, the steepest summer increase in four years, after the regulator Ofgem announced this morning that the average gas and electricity bill will jump to the equivalent of £1,862 a year – up from £1,641 – for a typical dual-fuel household paying by direct debit.
The energy price cap, introduced by Ofgem in January 2019, sets a maximum price suppliers can charge per unit of gas and electricity, as well as the daily standing charge. It applies to customers on standard variable tariffs (SVTs) and is designed to protect them from being overcharged. Around 40% of UK accounts (22 million households) are on fixed tariffs and will not be directly affected by this change. The cap does not limit the total bill, which depends on usage.
Ofgem CEO Tim Jarvis said the rise reflects “continued volatility in global energy markets” driven by higher wholesale gas prices caused by the ongoing conflict in the Middle East. He acknowledged that while energy use typically falls over the summer, households could explore fixed tariffs or change their payment methods to manage costs, and that smart meter customers can access half-price or cheap electricity at weekends.
Why are prices rising?
The primary cause of the cap increase is a surge in global wholesale gas prices triggered by the war in the Middle East. The conflict has heightened risks to maritime trade through the Strait of Hormuz, a chokepoint for roughly 20% of the world’s oil supply, imposing a significant “war premium” on global energy prices. Retaliatory attacks have also targeted regional infrastructure, disrupting energy production and distribution. Regional gas production has been affected by the shut-in of oil fields, reducing associated gas output, while natural gas prices in Asian markets have risen sharply, attracting more LNG cargoes as the region faces greater exposure to supply disruptions via the Strait.
Brent crude oil – the international benchmark – has seen dramatic fluctuations. Futures finished April more than 55% above pre-conflict levels. As of this morning, Brent crude traded at $97.24 a barrel, down 2.4% from recent highs but still elevated. Analysts at the broker Wealth Club, via chief investment strategist Susannah Streeter, noted that hopes for a peace deal between the US and Iran are keeping oil prices below $100 a barrel, with expectations that a resolution could be agreed amid pressure from Gulf states and the heating up of midterm election campaigns in the United States. “More patience is clearly needed,” Streeter said.
Ofgem’s Tim Jarvis, speaking on BBC Radio 4’s Today programme, described the disruption as now looking like “a more long-term disruption to markets than we might originally have hoped.” He said the October price cap will depend to a large extent on progress towards a peace deal and the speed with which shipping routes reopen, adding that the situation remains “very uncertain.”
Impact on households
Charities and campaigners have warned that the most vulnerable households will be hit hardest. Caroline Abrahams, director at Age UK, said the price cap increase is “the shape of worse to come” when the next cap is announced, as the full impact of the Middle East war feeds through. She called on the government to increase the value of the Warm Home Discount scheme from £150 to at least £200 this winter and widen eligibility to cover low-income households who currently miss out.
Simon Francis of the End Fuel Poverty Coalition highlighted that behind every price rise are households whose direct debits are about to increase, families whose energy debt becomes harder to clear, and pensioners whose summer is already overshadowed by the winter ahead. He noted that the energy industry posted more than £3 billion in profits from UK operations in the first three months of 2026. “Any chance households had to reduce energy debts or build up reserves before the winter heating season will be wiped out,” he warned. His organisation is also concerned that energy firms will factor higher costs into direct debit calculations, meaning households feel the financial impact of winter long before October. Forecasts suggest the October cap could remain at a similar level, leaving millions facing an extremely difficult year ahead.
Adam Scorer, chief executive of National Energy Action, said low-income households are “stuck on this rollercoaster of global energy prices,” resulting in unprecedented numbers owing around £5.5 billion in energy debt and rationing their energy usage. He urged the government to set out targeted interventions to help those on the lowest incomes afford their energy and clear their debt, and to streamline referral routes for fuel poverty support for households with young children and those with serious health conditions.
Broader economic context
The energy price rise comes at a time when households are already under significant cost-of-living pressure. Grocery price inflation has eased to 3.1% in the four weeks to 17 May, the slowest rate since December 2024, according to Worldpanel by Numerator. However, concerns remain about the impact of the Middle East crisis on food costs. The UK government has announced plans to reduce import tariffs by £150 million on a range of food categories, which equates to about £5 per household, with the average annual shopping bill for food and drink (excluding alcohol) totalling £4,087.
Some analysts, including Kathleen Brooks of the broker XTB, have noted that the UK economy is showing signs of weakness, with a rising unemployment rate, which may limit the second-round effects of the energy price cap rise on overall inflation. Brooks observed that UK gilt yields are falling despite the cap increase, partly because the price cap is not rising as fast as it did in 2022 due to increased renewable energy use, and partly because hopes of a peace deal that reopens the Strait of Hormuz could further limit future energy bill increases.
Future outlook and calls for energy independence
Leading analyst Cornwall Insight has warned that the more pressing concern is what follows. Its forecast for the October-to-December period puts the cap at £1,899 per year – a further 2% rise on the July cap – arriving just as households start turning on their heating for winter. Dr Craig Lowrey, principal consultant at Cornwall Insight, said: “A lot of people assume that if the conflict in the Middle East ended tomorrow, prices would return to their pre-conflict levels fairly quickly. However, that may be overly optimistic. The damage to infrastructure, the disruption to supply chains and the erosion of market confidence will not unwind overnight, and the impacts could be felt in bills for longer than many expect.” He added that without a longer-term move away from energy imports, “we are going to keep having this conversation.”
Energy Secretary Ed Miliband described the price cap rise as “deeply unwelcome news” and said the way to get bills down for good is to “go further and faster with this government’s drive for clean homegrown power we control.” He pledged the biggest investment in warm homes in British history, upgrading as many homes as possible before winter.
Jess Ralston, an energy analyst at the Energy and Climate Intelligence Unit, pointed to examples from Australia, where some households are seeing bills fall by as much as 10% as renewables and batteries take a bigger share of the system, and Spain, where a high share of wind and solar means power prices are consistently lower because they are less tied to global gas markets. “Renewables are starting to insulate wholesale electricity prices from these spikes, but unless we make the shift to electric heat pumps, British homes will become ever more dependent on foreign imports to try to keep warm in winter,” she said.
Paul Morozzo, a climate campaigner at Greenpeace UK, argued that the only effective long-term protection for UK billpayers is energy independence through investment in cheap renewable energy and warmer, better insulated homes. “Politicians selling the opposite view, whether that’s Trump, Putin or Farage, are working hard for the fossil fuel interests that fund them, but not for you. Scraping together the dregs of Britain’s oil and gas from beneath the North Sea, or fracking under your house, just prolongs our dependence on a global market that we will never control.”
