(Sept 15): UK household energy bills are forecast to jump by about 25% in January as the war in Iran drives up wholesale gas and electricity prices, adding to inflationary pressures across the wider economy, according to Bloomberg Economics.

The increase in energy costs means UK inflation could climb above 4% next year, double the Bank of England’s target, according to forecasts from Bloomberg Economics.

The energy price cap — a limit imposed by regulator Ofgem on how much suppliers can charge households — is expected to rise by about £427 (RM2,343.28) to around £2,150 a year for the average household, according to the forecasts.

This would push bills close to the £2,500 cap brought in by the government following Russia’s invasion of Ukraine in 2022. At the time, market prices were much higher, but the government subsidised the difference so that a typical household only paid the cap. The support cost the government about £21 billion.

European energy prices have jumped since the Iran war began in late February, disrupting oil and gas supplies from the Persian Gulf. UK month-ahead gas futures have risen by 150% since the conflict started, while the equivalent power contract has more than doubled.

Higher energy costs are a major concern for UK Prime Minister Andy Burnham. He took steps to lower household bills during his first few weeks in office in July but those savings were eroded by an increase in the energy price cap announced for October.

The government is now considering further measures, including extending the £150 Warm Home Discount to people who do not currently qualify, potentially including some disabled people, carers and pensioners. Such steps could be announced in the October budget, before taking effect over the winter.

Uploaded by Arion Yeow