UK ENERGY bills are set to rise in October, the sector regulator Ofgem announced on Wednesday, as the Middle East war drives up wholesale gas prices.
Higher energy costs have raised concerns about a fresh spike in inflation, piling pressure on the new Prime Minister Andy Burnham, who has made lowering the cost of living a priority.
Ofgem, which sets every quarter the price cap that suppliers can charge customers, said the cap would increase four per cent from October, adding around £5 ($7) per month to the average bill.
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A typical annual bill for gas and electricity will rise to about £1,723, Ofgem said.
It cited "the ongoing conflict in the Middle East" as a reason for the latest increase, with the effective months-long closure of the crucial Strait of Hormuz crimping gas supplies.
Burnham has announced that the value-added tax (VAT) would be removed from electricity bills from October to coincide with the expected rise in the price cap.
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Ofgem said, however, that "you might not see the full impact of the VAT reduction on electricity in your bill, because gas wholesale prices are still high due to global events".
It also noted that gas prices remain well below the levels seen at the height of the energy crisis in 2022 after Russia launched its invasion of Ukraine.
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Britain's annual inflation rate rose to 2.9 per cent in July, driven largely by a 13 per cent hike in the energy price cap that took effect last month.
