UK’s energy bills to rise as Mideast war pushes up gas prices

In October, British energy bills are expected to increase as the ongoing conflict in the Middle East pushes up gas prices, according to the sector regulator Ofgem. The energy price cap, which sets the maximum amount suppliers can charge customers, will rise by 4% in October, adding approximately £5 to the average monthly bill. This will push the typical annual gas and electricity bill to around £1,723.

The Middle East war has caused a shortage in gas supplies due to the closure of the Strait of Hormuz, which has led to the current increase in gas prices. Although the new prime minister, Andy Burnham, has announced that the value-added tax (VAT) will be removed from electricity bills from October, it is unclear whether the full impact of this VAT reduction will be reflected in the bills, as gas wholesale prices remain high due to global events.

While gas prices are still lower than they were during the energy crisis in 2022, caused by Russia's invasion of Ukraine, the rising energy costs are raising concerns about a potential spike in inflation. Burnham has prioritized lowering the cost of living, but the continued rise in energy prices may put pressure on this goal.