Ofgem’s latest energy cap rise adds pressure on household budgets, with wider increases to come

As we predicted in our December economics update, rising energy costs continue to pressure borrowers in 2025. Inflationary pressures on food and transport costs persist, and anticipated increases in council tax and water bills in Q2 will further impact household budgets.

Following a significant double-digit increase in their energy cap in the second half of 2024, Ofgem has announced an additional 6.4% rise in April, surpassing the predicted 5%. This will raise average annual bills by £111, bringing them to £1,849. Given the ongoing uncertainty in wholesale markets and the unresolved situation in Ukraine, further increases remain a possibility.

Impact on young families

Whilst the £111 average rise is already significant, those with young families will be disproportionately affected – something which we see coming through in our proprietary expenditure data source.

At a time when we expect to see a seasonal reduction in energy costs due to reduced usage emerging from the winter months, this increase is likely to result in energy costs remaining at inflated levels.

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Email us if you would like more information on how this service can be leveraged by your organisation – affordability-insights@4-most.co.uk.

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