Millions of households could see their energy bills fall by nearly £290 by next autumn when the general election is expected to be held, according to experts.
Energy analysis firm Cornwall Insights forecast the April 2024 Default Tariff Cap (price cap) will show a fall of 14 per cent in the second quarter of the year, with a typical dual fuel (gas and electricity) consumer expected to pay £1,660 a year, a £268 decrease from January bills of £1,928.
This trend is currently expected to persist throughout the year, falling to £1,590 in July before a slight increase to £1,640 from October.
Dr Craig Lowrey, principal consultant at Cornwall Insight said: “As households brace themselves for energy bill rises in January, current forecasts of price cap dips later in the year may offer a small light at the end of the tunnel.
“The recent stabilisation of international energy markets has trickled down to April’s price cap predictions, raising hopes that this downward path will continue throughout the remainder of 2024.
“However, history has shown that the wholesale energy market is highly volatile, and unexpected global events can lead to spikes in energy prices, ultimately feeding through to household bills – as we saw this time last year. Whether concerns in the Red Sea become heightened, or another potential disruption to supply occurs, there are no guarantees the price cap will not rise again.”
Natalie Mathie, energy expert at Uswitch.com, stressed: “Suggestions that the price cap could fall significantly in April will bring a glimmer of hope to consumers, but they still face a tough winter with high energy bills over the coming months.
“The cost of energy will rise on 1st January, with many households likely to pay more than they did last year as there is no Government bill support.
“The prospect of a 14 per cent fall in the price in April, and potentially another drop in July, means there is light at the end of the tunnel for consumers if these predictions become reality.
“If these predictions ring true, we hope that it will encourage suppliers to bring back cheaper fixed deals. Ofgem should ensure it is encouraging suppliers to offer deals widely, and at competitive prices.”
At Westminster, political experts expect the next General Election to be in the autumn as the Tories want more time for the economy to pick up.
Rishi Sunak is understood to be preparing his party to go to the polls earlier, in the spring, if there was a sudden economic change which boosted its poll ratings.
However, if the Conservatives still trail Labour by 15 to 20 points in May, the Prime Minister is expected to put off calling the election until the autumn.
Chancellor Jeremy Hunt on Wednesday hailed inflation falling to 3.9 per cent in November, a bigger drop than expected by the City.
He said: “With inflation more than halved we are starting to remove inflationary pressures from the economy.
“Alongside the business tax cuts announced in the autumn statement, this means we are back on the path to healthy, sustainable growth.
“But many families are still struggling with high prices so we will continue to prioritise measures that help with cost-of-living pressures.”
However, shadow Chancellor Rachel Reeves said: “The fall in inflation will come as a relief to families. However, after thirteen years of economic failure under the Conservatives working people are still worse off.
“Prices are still going up in the shops, household bills are rising and more than a million people face higher mortgage payments next year after the Conservatives crashed the economy.”
The Bank of England has been quick to warn that the job of bringing inflation back to its two per cent target is far from done and has poured cold water on mounting hopes of an imminent interest rate cut.
The ONS confirmed that the Bank, which held interest rates at 5.25 per cent last week, had not seen the most recent inflation figures before its latest decision.
The pound fell after the inflation figures, down 0.6 per cent at 1.27 US dollars, as the unexpectedly big decline reinforced forecasts for rate cuts in 2024.
Samuel Tombs at Pantheon Macroeconomics said: “November’s surprisingly sharp fall in CPI inflation reinforces the likelihood that the Monetary Policy Committee will begin to reduce Bank Rate in the first half of 2024, far earlier than it has been prepared to signal so far.”
He is forecasting the headline rate of CPI inflation to reach the Bank’s target of two per cent in the second quarter of next year, although the Bank recently said it would take two years for inflation to come back to its goal.
