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Energy bills to grow by more than £200 a year for millions as Ofgem increases price cap

ended 27. May 2026

Energy regulator Ofgem has today (Wednesday 27 May) announced a 13% increase of the energy price cap for the period covering 1 July to 30 September 2026.

The price cap refers to the default tariff applied when a customer has not signed for a fixed-rate tariff. It sets a maximum rate per unit and standing charge that can be billed to customers for their energy use. 

This increase is a result of higher wholesale gas prices, caused by the ongoing conflict in the Middle East. However, prices remain well below the height of the energy crisis in 2022 when the government stepped in to cap bills at £2,500.  

Customers will see a smaller price increase of around 5% on their electricity bills compared to gas bills which are rising by 24%.  This reflects the increase in the amount of renewable generation on the system and therefore reduced reliance on gas to generate our electricity. 

The current price cap for a typical household paying by direct debit for gas and electricity is £1,641. Based on the energy use of a typical domestic household, from July the price cap will rise by £18 a month (£216 a year) for the average household using both electricity and gas if this level was sustained for a year.

Responses asap please.

  • What are the consequences for this for inflation?
  • What other consequences will there be?
  • How will it affect households and businesses?

     

8 responses from the Newspage community

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Anita WrightVerified
Chartered Financial Planner at Ribble Wealth Management
Energy is one of the most inflationary variables there is, because it touches everything. When the price of gas goes up, it does not stop at the household bill. It feeds into the cost of making and moving almost every good and service in the economy. So a rise in the cap is not a one off. It seeps into wider prices over the following months. The deeper issue is supply. The world has spent years underinvesting in energy production. Until that capital is spent, every time the economy tries to grow, energy prices are ready to climb again. Governments can suppress prices for a while, but usually at the cost of slower growth. For households, energy is non discretionary. You cannot opt out of heating or power, so a higher bill means less money for everything else. That drains spending from the rest of the economy. For businesses, especially energy heavy ones, it squeezes margins. They either absorb the cost or pass it on, which loops back into broader inflation
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Justin MoyVerified
Managing Director at EHF Mortgages
Any increase in utility costs is unwelcome, but the equivalent monthly cost of around £17pm on average is not as bad as perhaps many expected, and with this hike over the summer months, the reduced household gas consumption will offset this extra burden. Whilst this increase will factor into mortgage lenders affordability calculations, it’s a negligible amount and not enough to make any sizeable change.
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Craig FishVerified
Director at Lodestone Mortgages
£18 a month extra on energy bills, on top of everything else that's risen, and if you've got a mortgage review coming up, the knock-on is just as painful. Higher energy prices push inflation up, inflation keeps the Bank of England holding rates, and holding rates means lenders keep mortgage pricing where it is. Anyone waiting for cheaper deals needs independent advice now, not in six months. Rumour has it that at the next review it will stay just as elevated. This isn't just a one quarter problem, this is a 2026 problem.
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Harry GoodliffeVerified
Director at HTG Mortgages
Another price jump that families didn’t need! An extra £200 a year is going to hit a lot of households hard after years of pressure. It’ll also feed back into inflation because businesses nearly always pass rising energy costs onto customers. The bigger problem is confidence; people were only just starting to feel a bit more stable, and now there’s another higher bill coming. Unless the government gets serious about energy, this same cycle will keep repeating itself.
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Kate UnderwoodVerified
Founder & Chief People Strategist at Kate Underwood HR and Training
Behind every percentage point is a kitchen table conversation. A mum doing mental gymnastics over the weekly shop. A café owner stares at the rota, wondering who they can afford to keep. Since January, families have swallowed higher council tax, water bills and a Living Wage bump that quietly vanished into pricier shopping. Now £216 more a year on energy, a Netflix subscription gone every month, before it ever felt like there's. Small businesses have it worse. They've absorbed the 15% employer NI hit, paid the wage rises, and now watch their customers tighten belts all over again. The corner shop isn't closing because the owner's lazy, it's closing because the maths stopped working months ago. These aren't line items on a spreadsheet. Their holidays are cancelled, birthdays scaled back, and good people quietly walking away from businesses they spent years building. Something has to give. Right now, it's the lives behind the numbers.
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Nouran MoustafaVerified
Practice Principal & IFA at Roxton Wealth
This is another reminder that inflation is not just a number on a chart; it is lived through household bills. A 13% rise in the price cap will put renewed pressure on inflation, particularly because energy feeds into almost everything: transport, food production, business costs and consumer confidence.

For households, the impact is immediate. Many people have already used up their financial buffer after years of higher mortgage payments, rent, food and insurance costs. Another £18 a month may sound manageable on paper, but for families already budgeting to the pound, it matters.

Businesses will also feel it, especially small firms with tight margins. Higher energy costs can either reduce profitability or be passed on through prices, which risks keeping inflation stickier for longer.

The wider consequence is behavioural. People delay spending, reduce saving, avoid moving home and become more cautious. That caution then filters into the wider economy.
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Rohit KohliVerified
Director at The Mortgage Stop
A 13% rise in the energy price cap is a serious hit for households, especially with gas bills rising much faster than electricity. For many families, that extra £18 a month will come on top of higher food, rent, mortgage and council tax costs. The bigger issue is that energy sits underneath almost everything. Food producers, manufacturers, shops, pubs, restaurants, care homes and small businesses all rely on it. When their costs rise, prices usually follow. That is why the recent fall in inflation to 2.8% was always going to be treated with caution as it may prove to be a brief pause rather than a turning point. If energy costs start feeding back through the economy, inflation could become sticky again, making interest rate cuts harder to justify and forcing the Bank of England to raise again. The real concern is that this pushes us towards another winter where the cost-of-living crisis rears its head again, just as households thought the worst might finally be behind them.
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Colette MasonVerified
AI Ethics Consultant at Clever Clogs AI
Households never really recovered from the last energy crisis. From July, the typical annual energy bill will be £1,862, still £100s higher than 2021 levels. The people least able to absorb the pain are often on prepayment meters, in poorly insulated rentals, with no capital to fix draughty windows and no power to upgrade the property. Landlords currently only have to meet EPC E, with tougher EPC C rules not due until 2030. The cost of poor housing policy shows up in energy bills.

£18/m extra lands on top of water bill rises, council tax increases, and grocery shops that are still elevated after years of food inflation. Discretionary spending gets cut again, which means high streets and hospitality take the hit downstream.

For those businesses, there is no price cap. During the last crisis, FSB evidence showed small firms responded by raising prices, cutting investment, or taking on debt just to cover energy bills. With borrowing still expensive, the squeeze works both ends at once:.