The government’s warm home discount scheme and volatile gas prices are the cause of the small, but unwelcome, increase to the energy price cap, our business and economics correspondent Paul Kelso says.
“It’s not a rise of very much, but it is an increase and obviously it’s coming at a time of year when people start putting the heating on,” he says.
“Prices will rise marginally, but they did go down by 8% in the second quarter of the year, so we’re still net down on that.”
He explained that part of the increase is due to the government expanding the warm home discount scheme, which gives £150 to an extra 2.7 million vulnerable households.
“The cost of that falls on all of us as bill payers,” he says.
However, the “biggest driver” of the 2% increase is wholesale gas prices, which have been volatile over the past three months while Ofgem assesses the cap.
“Donald Trump’s trade policies on global demand pushed prices down a bit, but we saw the attacks by Israel on Iran, which pushed them up because of concerns over liquified natural gas,” Kelso adds.
Watch his full analysis below…