Price cap to spike again: Watchdog warns worst is still to come for energy prices

Already sky-high energy prices are set to spike again in October, according to the energy watchdog, taking the power out of the UK’s growth prospects.

Ofgem boss Jonathan Brearley told MPs yesterday he expected the price cap – the maximum companies can charge for gas and electricity – to hit £2,800 when it is adjusted in October.

That would mark an over £800 rise going into winter, when energy use is at its highest, and would be almost £2,000 higher than where the cap was set in October 2020.

Brearley said the energy crisis was a “once in a generation event not seen since the oil crisis in the 1970s.”

The prediction, which came in higher than most analysts expected, came on the same day that:

• Business Secretary Kwasi Kwarteng said a windfall tax on energy firms like BP and Shell was “not necessarily the right thing” and would suppress investment
• Energy providers including SSE, Centrica and Drax took a beating on markets after reports that a levy might include those firms too, in addition to those operating in the North Sea
• Shell’s annual general meeting in London was broken up by Extinction Rebellion protestors

Brearley’s warning piles further pressure on the government which is being pushed by its own MPs, the opposition and campaigners to bring forward measures to mitigate the higher cost of living.

Economists are concerned the vast increase in the cost of everyday goods will send the UK into recession.

Real wages are expected to fall at their most significant rate since records began in 1956.