LONDON (Reuters) - Britain's domestic energy price cap is expected to rise more steeply than initially forecast in January and rise again in April, as geopolitical risks push up wholesale prices, analysts at Cornwall Insight said on Thursday.
Britain had hoped cooling energy prices would help curb inflation while many consumer groups had already called on the government to help struggling people manage their energy bills through a social tariff.
Cornwall Insight forecasts Ofgem’s price cap will in January rise to 1,923 pounds ($2,340.68) a year based on average use, up 4.9% from 1,834 pounds a year now and higher than the previous January forecast of 1,898 pounds it made in September.
“The jump in price cap predictions since September has once again highlighted the vulnerability of UK energy prices - and customer bills - to geopolitical events,” said Craig Lowrey, Principal Consultant at Cornwall Insight.
The Israel-Hamas conflict, fears over possible sabotage to the Finnish gas Balticconnector with Estonia and industrial action at gas production facilities in Australia had all led to higher wholesale gas prices, he said, which are a major part of the formula used to calculate regulator Ofgem’s price cap.
Cornwall said the cap is expected to edge higher again in April to 1,929 pounds a year, when it previously expected a dip in the second quarter of the year.
It now expects the cap to see its next fall in July to 1,880 pounds a year.
($1 = 0.8216 pounds)