UK Energy Bills Expected to Rise 13% This Summer Amid Iran Conflict

UK households are facing a significant increase in energy bills this summer due to the ongoing conflict in Iran, which has driven up energy costs. According to Jin10, energy consultancy Cornwall Insight Ltd. predicts that the cap on energy prices for ordinary households will rise by 13%, marking the largest increase since 2023. The cap is expected to increase to £1,850 (approximately $2,479) annually starting in July. Although these figures are estimates, they typically align closely with those published by the UK's Office of Gas and Electricity Markets (Ofgem). Ofgem resets the cap every three months, with the next adjustment set to take effect on July 1, following the closure of the calculation window on Monday. The anticipated increase reflects the substantial rise in European energy prices since the outbreak of the Iran conflict and the closure of the Strait of Hormuz at the end of February. UK natural gas futures rose by about 50% the following month, while electricity futures increased by approximately one-third. The rise in energy bills is expected to complicate the Bank of England's efforts to combat inflation. Previously, the market anticipated inflation would fall to the 2% target, paving the way for interest rate cuts. However, high energy prices could trigger a new cost-of-living crisis, making this outlook increasingly unattainable.