Energy bills will rise by more than £300 over the next year, highlighting the scale of the impact the crisis will have on Brits’ finances, shows research by the Centre for Economics and Business Research (CEBR).
The poorest households will experience a £258 uptick in their energy bills, representing 16 per cent of their disposable income, while the richest 20 per cent of the UK’s costs will rise £368, equating to one per cent of their disposable income, according to CEBR’s research.
Britain is currently experiencing an acute energy crisis, triggered by a sharp rise in the cost of wholesale natural gas as a result of severe shortage of the resource.
Gas suppliers are struggling to scale production to cope with soaring demand for energy triggered by economies around the world pushing toward pre-pandemic levels of economic activity.
The UK has been hit hard by the natural gas price hike due to the resource making up a large proportion of the country’s energy mix. Several energy providers have collapsed as a result of firms being unable to absorb higher wholesale energy costs, with an estimated 1.5m customers affected.
The boss of the energy watchdog, Ofgem, told the BBC the energy crisis is not a failure of regulation.
Jonathan Brearley said: “No one could have predicted the kind of gas price rises we have seen.”
“In a situation like that any market would be under strain.”
Energy providers have blamed the price cap, which limits the amount a supplier can charge customers on a standard variable rate, for triggering a wave of collapses. The cap will increase 12 per cent at the end of this month.
Soaring energy costs are likely to drive inflation higher. The Bank of England upped its forecasts this week for price rises to over four per cent by the end of the year, more than double its target, driven by the energy crisis.
Predictions for higher energy bills come as households across the country are waking up to the prospect of the looming cost of living crisis. Data from GfK shows consumer confidence dipped five points to minus 13 in September, driven by concerns over tax hikes, higher inflation and shortages in shops.
Karl Handscomb, senior economist at Resolution Foundation, said: “This winter will see a major income squeeze – and it will be focused on low-to-middle income households. High inflation, especially higher energy bills, will strain many families’ finances.”
Brits’ are also facing the prospect of struggling to get their hands on fuel to fill up their cars. Oil giants have closed forecourts due to low fuel supplies, caused by a lack of HGV drivers scuppering fuel supply chains.