UK energy bills set to hit three-year high of £1,729 from October

Household energy bills in the United Kingdom are forecast to rise to their highest level in three years from October 1, 2026, with the annual price cap for a typical household expected to increase by 4% to approximately £1,729. The increase, analyzed by the consultancy Cornwall Insight, is being driven by sustained pressure on global energy markets, with wholesale prices climbing to their highest point in nearly four years due to the ongoing conflict in the Middle East and Europe-wide heatwaves boosting demand for gas-fired power.

The forecasted rise from the current £1,663 annual cap will take effect just as winter approaches and households increase heating use. It comes despite the government's plan to remove the 5% VAT on household electricity bills from October 1, a measure intended to reduce costs by an average of £45 per year. Analysts state that soaring wholesale energy costs, heavily influenced by the Middle East situation, have more than offset the financial benefit of this tax cut. The conflict has disrupted shipping routes and created uncertainty around liquefied natural gas supplies, while extreme heat across Europe has pushed up gas demand for air conditioning.