British households just caught a break from inflation. Now that break is over.
Ofgem, the UK’s energy regulator, announced a 4% increase to the domestic energy price cap effective October 1 through December 31, 2026. The move raises the typical annual bill for a dual-fuel household paying by direct debit to £1,723, a £60 bump from the current cap of £1,663.
What’s driving the increase
The culprit is familiar: wholesale gas prices. They’ve surged 61% over the past three months, driven largely by escalating tensions in the Middle East, particularly involving Iran.
Gas unit rates are set to climb 8.7% to 7.97p per kilowatt-hour. Electricity, by contrast, is barely budging, with rates rising just 0.8% to 26.32p/kWh. That modest electricity number is partly thanks to the government’s temporary removal of VAT on electricity bills, a measure that saves households roughly £45 annually on the energy cap, independent of Ofgem’s quarterly adjustments.
