As household energy bills are set to increase by 4% from today, Cornwall Insight have forecast that an even bigger rise is coming our way in January.
The price cap is expected to rise by 16% compared to October, reaching £1,999 per year for a typical duel-fuel household in the new year. This is an increase of £276, the largest since the first month of 2023.
Cornwall Insight say the changes are driven by ongoing conflicts in the Middle East, which have disrupted gas supplies to the UK and the rest of the world.
Richard Neudegg, director of regulation at USwitch, said: “Switching energy tariff to a well-priced fixed deal is the biggest lever households on the price cap can pull to bring their costs down right now.
“This winter will be tougher than last, so households should take action now. For those worried or concerned about paying their bills – it’s important not to suffer in silence.”
Energy regulator Ofgem sets the wholesale part of the cap using prices from a fixed period, known as the observation window. With this window now nearly halfway through, the price rise seen in September is already locked in, making a further increase in January almost certain.
However, Cornwall Insight say that the extent of this will depend on how the US-Iran conflict progresses. But the organisation says even if the conflict ended tomorrow, the supply disruption would take months to correct itself.
The forecast also shows that the effects could stretch far beyond this winter. If Europe goes into spring 2027 with depleted gas storage inventories, more gas will need to be bought during warmer months to rebuild stock, therefore pushing prices further up.
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