Bills boost for hard-up Brits: Experts predict the energy price cap could fall below £2,500 thanks to warm winter – saving households hundreds of pounds and helping drive down inflation
- An unexpectedly warm winter have caused gas prices to drop
- The price cap is forecast to fall to £2,478 according to Investec
- This figure is more than £150 lower than its prediction made on January 4
The energy price cap could fall below £2,500 from July, analysis has suggested.
An unexpectedly warm winter and substantial levels of gas storage have caused gas prices to drop in recent weeks.
The price cap – the maximum energy suppliers can charge consumers for each kilowatt per hour of energy used but expressed as the amount a typical household would pay in a year – is forecast to fall to £2,478 according to financial services firm Investec.
The figure is more than £150 lower than its estimate made on January 4.
The energy price cap could fall below £2,500 from July, analysis has suggested
Their predictions suggest the price cap level will fall almost £1,000 to £3,317 in April before reaching July’s low, and then increase to £2,546 again in October as winter approaches.
Gas prices have fallen in recent weeks due to milder weather than expected and substantial levels of gas storage.
The government’s energy price guarantee scheme, which subsidises consumer bills in light of the recent price surge, will now only cost the public purse £2.3billion – a sharp reduction from the £12.8 billion forecast by the Office for Budget Responsibility in November.
Investec analyst Martin Young said: ‘Our tariff cap estimates fall again as wholesale prices have nudged down since our previous mark-to-market, and now stand in the region of £2,500 for the second half of 2023.’
Their predictions suggest the price cap level will fall almost £1,000 to £3,317 in April before reaching July’s low
The price guarantee policy, which protects consumers from paying more than £2,500 per unit of energy, will be loosened in April, when the guarantee will rise to £3,000.
Falling energy prices may put pressure on the government to reverse the energy support, as announced in Chancellor Jeremy Hunt’s Autumn Statement.
Money saving expert Martin Lewis noted: ‘Bills will only drop if the price cap is lower than the Energy Price Guarantee. No one is predicting that in April – though it is likely from July.’
Energy prices spiked following Russia’s invasion of Ukraine last February. In October 2021, the energy price cap was just £1,277.
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