UK energy bills forecast to reach 3-year high: comment
- By Reuters -
- Aug 19, 2026
UK’s domestic energy price cap is forecast to rise about 4% in October to a three-year high, analysts at Cornwall Insight said on Wednesday, with higher wholesale costs due to the Iran war expected to wipe out the government’s tax cut on electricity bills.
New forecasts from Cornwall Insight put Ofgem’s energy price cap at £1,729 ($2,344) a year for typical use from October, up £66 from £1,663 in July. The regulator is due to publish the next quarterly cap level by August 26.
The expected increase follows data on Wednesday showing a previous rise in energy bills pushed British inflation to a four-month high in July. Cornwall Insight said the jump is being driven by ongoing uncertainty over the U.S.-Iran conflict, with wholesale prices for the coming winter now at their highest level in almost four years.
Disruptions to shipping in the Middle East and lower liquefied natural gas exports from Qatar, one of the world’s largest gas exporters, have compounded the pressure. Demand for power across Europe has also climbed due to heatwaves, pushing international gas prices higher.
Wholesale energy prices remain the largest single factor in Ofgem’s domestic price cap formula. The quarterly calculation also reflects suppliers’ network costs and environmental and social levies.
In response to the cost-of-living pressures, new British Prime Minister Andy Burnham said a 5% tax on electricity bills will be removed from October 1. The cut does not apply to gas costs, which are also included in the price cap.
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