UK Energy Price Cap Set to Rise by 4% Due to Iran Conflict Costs

The UK's energy price cap is set to rise by 4% from October as wholesale costs driven by the conflict in Iran push up bills. Ofgem, the British energy regulator, announced the increase, which will affect around 22 million households on variable tariffs.

The new price cap of £1,723 ($2,348) is a significant jump from the previous cap for July to September and comes despite measures taken by the government to ease cost-of-living pressures. The removal of VAT on electricity bills prevented the cap from rising by an additional £45.

Analysts at Cornwall Insight predict that wholesale energy costs are likely to remain elevated, with a possible further 9% rise in January to £1,872. This is because lower stocks going into winter as demand increases mean falling bills in January are unlikely.