Energy price cap to rise by 3.5% in January

This would mean the typical price cap will go up from October 2023’s £1,923 per annum to £1,996 at the start of next year. It’s then predicted to dip slightly in the second quarter of the year.  

This January rise is largely down to the recent direction of wholesale prices, with the volatility caused by the Australian LNG production strikes – which occurred over the last few weeks. Additionally, the first three months of the year are typically associated with higher wholesale prices, with this impacting the forecast.  

Cornwall Insight principal consultant Dr Craig Lowrey said: “The energy price cap has steadily declined over the past year, and while it is disappointing to see this trend stall, given the movements in the wholesale market of late it is not wholly unexpected.  

“While the rise is small, it shows we cannot just assume prices will continue their fall and eventually reach pre-pandemic levels. Policies need to be put in place to deal with the possible situation that high energy prices have become the new normal. 

“Dealing with persistently high prices in this new energy landscape will not be achieved by a one-size-fits-all solution. The government possesses a toolbox of short- and medium-term options, including targeted support such as social tariffs or investment in energy efficiency, which could ease the burden on vulnerable households. 

“However, it is important we understand such assistance cannot overcome the effects of a volatile international energy market on bills. It is only by continuing our transition away from fossil fuels, towards secure and sustainable domestic energy sources that we can reduce our exposure to such international drivers and, in turn, stabilise our energy prices.”