UK

Millions of households will see their energy bills rocket as the price cap is hiked to £3,549 a year, plunging many into financial hardship.

The record 80% hike in October, announced by the regulator Ofgem, will see a typical default tariff customer paying an extra £1,578, laying bare the deepening cost of living crisis.

The rise follows a 54% increase in April, which saw average bills surge to £1,971 a year.

Bills set to soar after price cap announcement – live updates

Meanwhile, 4.5 million pre-payment meter customers, who are often the most vulnerable and already in fuel poverty, will see an even more punishing increase, with their average annual bill set to go up to £3,608.

In all, around 24 million households will be hit by the price spike.

Chancellor Nadhim Zahawi has admitted that the soaring energy costs will cause “stress and anxiety for many people” – but added that “help is coming” from the government.

More on Cost Of Living

Ofgem chief executive Jonathan Brearley said: “We know the massive impact this price cap increase will have on households across Britain and the difficult decisions consumers will now have to make. I talk to customers regularly and I know that today’s news will be very worrying for many.

“The price of energy has reached record levels driven by an aggressive economic act by the Russian state. They have slowly and deliberately turned off the gas supplies to Europe causing harm to our households, businesses and wider economy. Ofgem has no choice but to reflect these cost increases in the price cap.

“The government support package is delivering help right now, but it’s clear the new prime minister will need to act further to tackle the impact of the price rises that are coming in October and next year.

“We are working with ministers, consumer groups and industry on a set of options for the incoming prime minister that will require urgent action.

“The response will need to match the scale of the crisis we have before us. With the right support in place and with regulator, government, industry and consumers working together, we can find a way through this.”

Read more:
Explainer: Everything you need to know about higher bills
Analysis: As record bills make fuel poverty mainstream government inaction leaves public in the dark

Soaring wholesale gas costs – fuelled by Russia’s invasion of Ukraine – have driven the energy price cap increase, which is widely expected to spiral even further next year.

It ramps up the squeeze on households already wrestling with soaring food and fuel prices.

Sky News has found that a third of households are already struggling to pay their energy bills.

The sharp rise will further add to inflation, which the Bank of England is forecasting will hit 13% in the autumn, having already reached a 40-year peak of 10.1% in July.

It increases the likelihood of another interest rate rise, adding to the cost burden of many hard-pressed households.

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There had already been widespread calls for the government to urgently increase support to help people cope with the cost crunch and these will only mount ahead of the impending hike in bills.

All households have been promised £400, with more for the vulnerable, but this will be dwarfed by the latest rise.

When the government first announced its financial support package in May, the energy price cap was predicted to reach around £2,800 in October.

Labour, the Liberal Democrats and most major energy suppliers have proposed plans to freeze prices at current levels to ease the immediate pressure on households.

But Boris Johnson has stressed he will leave major decisions on additional support to his Downing Street successor, who will not be announced until 5 September after the Tory leadership contest.

Just ahead of the increase, frontrunner Liz Truss said she would use an emergency budget to “ensure support is on its way” if she becomes prime minister, having previously stressed she favoured tax cuts over handouts.

She has also promised to cut green levies, while her rival Rishi Sunak has pledged more targeted support and to remove VAT from energy bills.

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Fuel poverty charities have pressed the government to urgently extend the support available “to prevent the bleakest of winters”.

Adam Scorer, chief executive of fuel poverty charity National Energy Action, said: “The scale of harm caused by these price rises needs to sink in. A warm home this winter will be pipedream for millions as they are priced out of a decent and healthy quality of life.

“Action is needed now to prevent the bleakest of winters.”

Simon Francis, co-ordinator of the End Fuel Poverty Coalition, said: “Today’s Ofgem price hike is like a dagger to the heart of millions of people up and down the country.

“As a result of the decision, parents will be unable to feed their children, the sick and elderly will be condemned to worsening health, disabled people will go without vital medical equipment and households will be forced into poverty for the first time in generations.

“All the solutions lie at the Westminster Government’s door, yet it is silent in the face of this looming disaster.”

Philippe Commaret, the managing director of energy giant EDF, has warned that half of UK households could be in fuel poverty in January as a result of rocketing prices, while the consumer group Which? has urged the government to raise its energy bills discount by at least 150% or risk pushing millions of people into financial distress.