Energy price cap forecasted to drop in October

Cornwall Insight has forecasted that the energy price cap will fall to £1,698 a year for a typical dual fuel consumer in October. Thi is £22 lower than the July 2025 cap of £1,720 and a slight decrease on the prediction released in May. Although a drop of just 1%, the forecast offers some relief to households, but there remains significant uncertainty with just under two months until the final figure is announced.

Over the past few weeks’ international tensions in the Middle East saw wholesale energy prices rise, with our price cap forecast reaching a peak of £1,777 on 19 June. As the military tension has eased, the wholesale market has fallen – a fact which, coupled with updates to our forecasts of non-wholesale costs, is reflected in our latest outlook for the cap.

While the slight fall in predictions is welcome, the cap still remains hundreds of pounds above pre-pandemic prices, even when adjusting for inflation. Furthermore, there is little indication that prices will reduce substantially over the next few years.

Looking to 2026, Cornwall Insight predict a further small fall in January, with prices rising slightly in April. However, market volatility, geopolitical risks, and potential changes – and additions – to non-wholesale cost parts of bills mean forecasts remain subject to change.

Dr Craig Lowrey, Principal Consultant at Cornwall Insight said “While any reduction in energy bills is welcome, we must not let small fluctuations in the price cap mask the bigger picture. Households are still paying far more for their energy than they were before the pandemic, with the current outlook showing little prospect of a meaningful drop over the next few years.

“Our reliance on international energy markets means that while we have a range of supply sources, this brings with it a vulnerability to global events and price shocks – something that was evident in June. If we want to bring real stability and affordability to the energy system, we need to continue, and speed up, our transition to homegrown, renewable power.

“This transition will not happen overnight, and there will be short-term costs along the way. However, in the long-term, building a more self-sufficient energy system is the only way to help shield consumers from international volatility and put us on a more secure and sustainable path for the future.”

Cornwall Insight’s Default Tariff Cap Forecast Based on Typical Domestic Consumption, and Per Unit Costs and Standing Charge Values (dual fuel, direct debit customer)