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- New energy price cap set at £2,074 from July
- What should you do now?
- Bill payers warned they won't save money this winter
- The cost-of-living crisis is starting to subside – so why are economists angry and what next? | Ed Conway
- Another rate hike is now on the table
- Who benefits from rising food prices?
- Your Dilemma:I pay my father's mortgage, how do I become an official member?
- Budget mother:save for your kids|Will a Food Subscription Save Money?|holiday pay|Best Broadband Deals
What should people do now?
If you've been following along, you'll see this is our second post of this type - we're doing a new one as we have some new expert contributions, including from Uswitch.
call your provider
Uswitch said anyone with significant credit should contact their energy supplier in July to talk about lowering their direct debit.
Natalie Mathie, an energy expert on the comparison website, said: "The average household can expect a direct debit of £173 a month, but typical seasonal use can cost you just £110 a month in the summer."
Precautionary measures
It's also worth noting that there won't be any government support this winter - such as the £66 per month allowance most people received at the end of last year and this year.
However, Ms Mathie said that lowering the price cap was "good news", but people should be aware that now that the government's energy price guarantee is in place (from the end of June), with the price cap being renewed every three months, "the volatility "Dominates.
Convert transactions?
Analysts now believe that fixed-rate deals could re-enter the market -- so you may be able to get deals for less than the price cap.
“This is a turning point for energy suppliers, given the market conditions they can now start offering firm deals again, which will help to encourage real competition in the retail energy market,” said Ms Mathie.
“After a long period in which they had no choice but to try to consume less at home, it is time for energy customers to look back at the market.”
Alice Haine, personal finance analyst at Bestinvest, agrees: "While no final deals are currently available, things could change in the coming days and weeks as suppliers start offering deals, although any final decisions should be carefully considered."
Energy price cap "marks an important milestone" for inflation, Sunak said
Rishi Sunak shared his view on today's energy price cap cut, saying it was an "important milestone" for the government to cut inflation in half.
"The good news is that energy price caps are coming down, cutting energy bills by an average of almost £430 a year from July," the Prime Minister tweeted.
"This marks an important milestone in our efforts to halve inflation."
Sunak has pledged to bring inflation down to 5% this year, but figures from the ONS this week showed that inflation has fallen less quickly than economists had expected.
Inflation fell yesterday for the first time since last summer from 10.1% to single digits of 8.7%. But core inflation, which excludes volatile factors such as energy, food and tobacco prices, rose to 6.8%, the highest level since March 1992, thus providing a clearer picture of what is happening below the surface.
Business Roundup: Cineworld, Pets At Home en Youngs
Speaking of cost of living and business news, we've got updates on some household names...
movie worldIt is expected to exit bankruptcy proceedings in July following further backing from lenders for its restructuring plan.
The struggling theater chain said the plan is now backed by lenders who own about 99% of existing loan facilities and at least 69% of outstanding debt.
The group is pushing ahead with plans to restructure its roughly $5bn (£4bn) debt as it looks set to emerge from Chapter 11 bankruptcy protection in the US in the first half of this year.
pets at homeThe company's annual profits skyrocketed after pet owners splurged on expensive toys and supplies for their furry companions.
The company, which also provides grooming and veterinary services, said it expected underlying pre-tax profit to reach £136 million by 2024.
young peopleIt welcomed the positive sales and said cost inflation weighing on the sector, such as rising food prices, was "starting to ease".
The 227-location pub group saw sales rise by nearly a fifth in the year to April 3 and has held up well in recent weeks.
It warned it still faces "challenging times" due to high inflation and a resumption of train strikes, but the Rugby World Cup would be an opportunity to boost sales.
Where are gas prices now?
We know that the reduction in energy price caps is largely due to lower wholesale prices for natural gas.
This chart shows UK wholesale gas prices have retreated from record highs, but remain above pre-crisis levels
What can be done to bring the bill back to its previous level?
Business reporter Paul Kelso
There are several options that can reduce household bills, but none that will prevent people from paying real energy costs.
Ofgem supports the introduction of a "social rate", which would offer lower rates to the least well-off households.
The regulator is already in talks with the water industry and local authorities on how to identify households struggling to pay for basic services, and ministers have sounded encouraging, but it will have to be borne by the taxpayer or charged extra by others bill payers.
There are other technical changes that can reduce some costs.
So-called "green taxes" applied to the cost of electricity could be shifted to gas to more accurately reflect the environmental impact of electricity generation, but taxpayers would have to fill in the gaps.
Ultimately, the high energy pricesRemoving Russian oil and gas from our energy mix, a void we can't fill, stems from a growing renewable energy sector and the costs of war we may have to get used to.
Read more of Kelso's thoughts on today's price cap news here...
Millions of households are trapped in fuel poverty
Millions of households will run out of fuel despite lower energy price caps, a charity has warned.
If you've just joined us, the cap will drop from the current £3,280 a year to £2,074 from 1 July.
But the drop was not big enough for the National Energy Action, with prices still "more than two-thirds higher than when the energy crisis began" and "another two million households are fuel-poor".
Below is some of the growth we've seen since October 2021...
“More than 2.5 million underprivileged, low-income families are no longer receiving government assistance for bills they cannot pay,” said CEO Adam Scorer.
"For them, the energy crisis is far from over."
Is extra support available if you have problems with payment?
The £400 rebate given to all households in England, Wales and Scotland to offset rising winter bills has ended.
Currently, only means-tested welfare recipients, pensioners and people with disabilities can get further help with their utility bills, at £900, £300 and £150 respectively.
This is how the price limit has changed since 2018
Ofgem's cuts have caused the energy price cap to drop significantly from April levels, but if you look at the chart below, it's still quite a bit higher than it was before the pandemic...
Centuries-old home boilers are more efficient
A Uswitch boiler study found that century-old homes are more efficient than homes built in the past decade.
Homes built since 2012 scored just 5.39 out of 10 in the comparison site's survey.
That's only slightly above the national average - 5.
Home boilers built in 2003-11 were the most efficient with a score of 8.36/10.
Given the amount of exterior walls, you might think that the middle and back row houses are different, with an overall boiler efficiency of 5/10.
Perhaps most surprisingly, homes built more than a century ago, between 1900 and 1929, had an overall boiler efficiency rating of 6.16.
Tips for families after lowering the price cap - by Martin Lewis
Money-saving experts have welcomed the reduction in energy price caps, saying the news "will come as a breath of fresh air to a lot of people," but warn most people won't be saving money this winter.
Martin Lewis explains what the new cap means for the average family...
“Bills will fall by an average of 17 per cent, meaning that for every £100 a month people pay today, they will typically pay £83 a month from July.
“Except for those with high usage, rates are fallingDoesn't make up for £66 a month in state aidPeople don't get their money until April - and most are collected monthly, meaning they pay the same in the summer as they do in the winter. "
In addition to his tips for standard rate customers (which you can read in our previous post), he also has advice for customers using prepaid meters.
He said the July rate would be a sharper cut than direct debit, about 18%.
It's because it's the first timePrepaid Price CapWill be on the same level as direct debit.
"With many non-smart prepaid meters you pay for the electricity on the day you top up - that isThese customers should aim to use up their credit by the end of June, as little as possible when prices get cheaper on July 1," he said.
"Then you top up on July 1 - even if it's just a pound - and you benefit from the new lower interest rate."
For all customers, Mr. Lewis said yesWorth reading the meter readings around July 1Show how much energy they use at higher speeds - this prevents your provider from estimating usage and possibly assuming that you are using more energy at higher speeds than you actually are.
FAQs
What is happening to the cost of living in the UK? ›
In the UK, the price of consumer goods and services rose at the fastest rate in four decades in the year to October 2022. The annual inflation rate fell to 7.8% in the 12 months to April 2023, down from 8.9% in March 2023.
Will the cost of living go down UK? ›The Office for Budget Responsibility is warning of a big drop in living standards over the next two years. Once inflation is taken into account, household disposable income is set to fall by 5.7% between 2022 and 2024. That is the largest two-year fall since records began in the mid-1950s.
Is it cheaper to live in the UK than the USA? ›When it comes to grocery and food prices, the UK is the winner in terms of overall affordability. The average British household spends less on groceries per month compared to the average American household, and UK supermarkets tend to offer more own-brand products, which are generally cheaper but still of good quality.
Why is Britain so expensive to live? ›To a lesser extent, the UK cost of living is also affected by relatively higher transport and energy costs. Tax rates are important for goods like alcohol, petrol and cigarettes with UK tax rates higher than European / US rates. However, although the UK is expensive in some areas, in other areas it is cheaper.
How much money is enough to survive in UK? ›The average cost of living as a family of four is around $3,135(£2,268) without house rent. As a single person or student, the estimated cost of living per month in the UK is $900(£651) without rent.
Are UK house prices unaffordable? ›The average British home now costs about nine times average earnings: one estimate I recently read reckoned that the last time UK houses were this expensive was in 1876.
Will inflation go down in 2023 UK? ›We expect inflation to fall quite quickly, to around 5% by the end of this year and then meet our 2% target by late 2024. Why is inflation expected to fall quickly during 2023? What is the Bank of England doing to help bring inflation down? How does raising interest rates lower inflation?
Why is the UK going through a cost of living crisis? ›This is caused in part by a rise in inflation in the UK, as well as the economic impact of ongoing issues such as the COVID-19 pandemic, Russia's invasion of Ukraine, and Brexit. While all in the UK are affected by rising prices, it most substantially affects low-income persons.
Will food prices go down in 2023 UK? ›Food retailers have said they expect prices to rise in 2023 overall but with the rate of inflation declining through the year and some products which have seen the sharpest rises falling in price.