Rising energy prices are the driving force of the cost-of-living crisis
(Picture: PA)Wholesale gas prices in the UK are rising fast -- heading near to the peak they touched in the immediate aftermath of Russia’s invasion of Ukraine – just a week before regulators set a new price cap for consumers’ energy costs.
The continued increase means customers are looking at even higher bills even before the autumn weather bites, with the UK braced for a bleak economic winter, with inflation forecast to top 13% as rising energy prices drive the cost-of-living crisis.
Friday’s continuing rally increase took prices to almost £4.60 a therm for gas delivered in September, taking the rise this week to 16% and extending the run higher into one of the longest of 2022. Front-month contracts peaked at £4.93 in early March.
One of Ofgem’s directors, Christine Farnish, resigned this week saying its move to change the price cap more frequently gave too much benefit to companies over consumers. The current cap to annual energy costs – at £1,971 via Direct Debit and £2,017 for prepayment customers – is likely to rise by about £400 next week.
A chorus of calls for action has rung out from a range of prominent people across industry and public life in the UK -- from CEOs of FTSE-listed businesses to champions of small business and even NHS policy gurus -- for the government to take action to offset the impact of rising energy prices. The money saving expert Martin Lewis has warned that millions of people face “destitution” due to the crisis, which he compared in scale to the Covid-19 pandemic.
Clarity on ministers’ response is only likely to follow the outcome of the Conservative party’s leadership race. Either Liz Truss or Rishi Sunak will emerge as the next prime minister on September 5, meaning Boris Johnson will leave Downing Street.
Labour has called for the recall of Parliament to address rising energy bills, a move so far resisted by the sitting prime minister and his two would-be successors.
