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Energy bills will still be far higher than they were pre-crisis despite Ofgem’s announcement that the energy price cap will fall to £2,074 on 1st July according to the Resolution Foundation analysis.
The Foundation notes that falling energy bills are projected to bring inflation down by 2.7 percentage points by July compared to the start of 2023, reducing overall inflation by over a quarter this year.
However, while a fall in energy bills is welcome news for struggling families, wholesale gas prices from October 2023 to March 2024 are forecast to remain three times as much as they were between 2015 and 2020. Expected energy costs for a typical household for 2023-24 are now expected to be around £2,100 a year, or 80 per cent higher than were before the crisis.
Emily Fry, Economist at the Resolution Foundation said “Ofgem’s announcement today that the price cap will fall to £2,074 from July marks the welcome shift when falling wholesale gas prices at last feed through to falling household energy bills.”
“Expected energy costs for a typical household this year are now on course to be around £2,100 – still up by almost 80 per cent on what families were used to pre-crisis.”
“A return to the level of bills households paid pre-crisis isn’t arriving anytime soon. The case for developing more sustainable support with energy bills, such a social tariff for vulnerable households, therefore remains strong.”