Household energy prices are set to remain high throughout this winter, according to latest forecasts ahead of a £221 jump from Wednesday.
The energy price cap is currently forecast to fall by around 0.5% in October compared to July as the US-Iran 60-day ceasefire helps to stabilise wholesale gas markets, Cornwall Insight said.
However, it warned conflicting reports on the reopening of the Strait of Hormuz, the patchy progress of peace talks and uncertain timelines for repairing key regional infrastructure meant prices remained high, if less volatile than in the spring.
Cornwall said it expected a typical household to be facing a bill of £1,849 from October.
While Ofgem is updating its definition of a typical consumer from July to reflect falling household energy use, which adjusts the headline figure to £1,654, Cornwall said this represented “little change” on a like-for-like basis.
While July’s higher prices will be cushioned by warmer weather and lower household energy use, the October cap will land as people switch their heating back on and will have a greater impact on household finances.
Dr Craig Lowrey, principal consultant at Cornwall Insight, said: “The Iran ceasefire gave the markets some breathing room but this is a pause, not a resolution to the conflict.
“What comes out of the final agreement, if there is one, will matter enormously for energy prices. And even in the best-case scenario, the enduring effects from the conflict will be with us for a while.
“Infrastructure takes time to repair, supply chains take time to recover and households will be left dealing with the consequences for some time.”
He added: “October bills always hit harder than July’s because people are turning their heating on again and this year that coincides with a difficult geopolitical backdrop.
“The new Prime Minister will face real pressure to act on support for vulnerable households but the harder question is what comes after that – currently we are in a perpetual cycle of global shocks, high bills and short-term fixes.
“More permanent measures like social tariffs, moving levies into general taxation, or removing VAT on energy bills would take some of the pressure off bill-payers but there is no firm steer that these options are being actively pursued by Government at the moment.”
Ofgem’s price cap will lift by 13% or £18 a month from July 1 to £1,862 a year for the average household using both electricity and gas after the Middle East conflict sent global energy costs soaring.
Prices rocketed after Iran responded to US and Israel attacks by blocking the Strait of Hormuz shipping route, through which a fifth of the world’s oil and gas is carried.
Ofgem will announce the next price quarterly cap level for October to December on or by August 26.
It leaves a question mark over whether the Government will launch any targeted energy support for the winter months.
While it is unclear who the Chancellor will be later this year, given the change in leadership after Sir Keir Starmer resigned, cost of living and bills pressures will be top of their inbox.
Chancellor Rachel Reeves said earlier this year she would consider some form of support in the autumn if necessary and if energy prices remain high.
Even though energy bills may not go up further in October, many will face a payment shock in the winter months unless prices come down.
Figures earlier this week from Ofgem showed debt owed to energy suppliers reached a record high of £4.79 billion in the three months to March – a 5% increase on the last quarter and 15% higher year on year.
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