Energy price cap could fall below £2,500 after unexpectedly warm winter, analysis shows

Bills soar for ailing Britons: Experts predict the energy price ceiling could fall below £2,500 thanks to the warm winter – saving households hundreds of pounds and helping to lower inflation

  • An unexpectedly warm winter has caused gasoline prices to fall
  • According to Investec, the price cap is expected to drop to £2,478
  • That figure is more than £150 below the January 4 forecast

Energy price cap could drop below £2,500 from July, analysis says.

An unexpectedly warm winter and extensive gas storage facilities have caused gas prices to fall in recent weeks.

The price cap – which allows utilities to charge consumers for each kilowatt-hour of energy used, expressed as the amount a typical household would pay in a year – is expected to fall to £2,478, according to financial services firm Investec.

The figure is more than £150 below the January 4 estimate.

Energy price cap could drop below £2,500 from July, analysis says

Energy price cap could drop below £2,500 from July, analysis says

Their predictions suggest that the price cap level will fall by almost £1,000 to £3,317 in April before hitting the July low, and then rise back up to £2,546 in October as winter approaches.

Gas prices have fallen in recent weeks due to milder than expected weather and ample gas storage.

The Government’s Energy Price Guarantee Scheme, which subsidizes consumer bills amid recent price increases, will now cost the public purse just £2.3bn – a significant reduction from the £12.8bn the Office for Budget Responsibility forecast in November.

Analyst Martin Young of Investec said: “Our tariff cap estimates fall again as wholesale prices have fallen since our previous market assessment and are now in the £2,500 range for the second half of 2023.”

Their predictions suggest the April price cap will fall by almost £1,000 to £3,317 before hitting the July low

Their predictions suggest the April price cap level will fall by nearly £1,000 to £3,317 before hitting the July low

The price guarantee policy, which protects consumers from paying more than £2,500 per unit of energy, will be relaxed in April when the guarantee rises to £3,000.

Falling energy prices could put pressure on the government to roll back energy subsidies, as announced in Chancellor Jeremy Hunt’s fall statement.

Savings expert Martin Lewis observed: “Bills will only go down if the price cap is below the energy price guarantee. No one is predicting that in April – although it’s likely as of July.

Energy prices shot up after Russia’s invasion of Ukraine last February. In October 2021 the energy price cap was just £1,277.

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Emma Colton

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