Brits warned as Energy Prices set to Rise in January 2025

British households have been warned as energy prices are expected to rise in January 2025, adding pressure to household finances.

This is despite earlier hopes that prices may ease early next year.

Great Britain’s price cap is forecast to rise to £1,736 a year for the average dual-fuel bill, according to Cornwall Insights.

This is a 1% rise from the current price cap, which increased in October 2024 to £1,717 a year for a typical consumer.

As the UK enters heating season, Ofgem will announce the latest quarterly cap for January 2025 on November 22.

Cornwall previously expected the cap to ease slightly in the new year.

The cap has become an important indicator for British household finances since the energy crisis kicked off by Russia’s invasion of Ukraine in early 2022.

As of 2024, energy prices remain much higher than before the invasion, adding to the financial pressure on vulnerable households.

Before the war, the cap was £1,216.

But the energy market turmoil that followed the invasion threatened to push bills beyond £4,000.

In October 2022, the government stepped in to create a separate energy price guarantee to cap bills at £2,500.

The £1,736 headline rate means that an average UK household would expect to pay that much each year but families will pay more or less depending on usage.

Cornwall predicted that prices will drop slightly in April 2025 and again in October 2025, but warned that “higher prices are likely the new normal”.

Craig Lowrey, a principal consultant at Cornwall Insight, said:

“Our final price cap forecast for January indicates, as expected, bills will remain largely unchanged from October.

“Supply concerns have kept the market as volatile as earlier in the year, and additional charges have remained relatively stable, so prices have stayed flat.

“While we may have seen this coming, the news that prices will not drop from the rises in the autumn will still be disappointing to many as we move into the colder months.”

Cornwall said several factors in a “relatively volatile wholesale market” had sustained prices.

These included “supply concerns tied to geopolitical tensions, maintenance on Norwegian gas infrastructure, weather disruptions” and others.

According to Cornwall, the best way to reduce dependence on volatile global energy markets was to build renewable infrastructure in the UK.

Lowrey added: “Although the transition does require upfront investment, it promises lower bills down the line.

“The government needs to keep momentum on the transition while acknowledging that immediate support is essential for those struggling now.

“Inaction is a choice to leave people in the cold.”

Richard Neudegg, the director of regulation at Uswitch, said:

“Predictions that energy prices for those still on default tariffs will rise again in January are another kick in the teeth for households.

“The price cap is supposed to protect consumers, but millions face paying more during the coldest months of the year.”

Peter Smith, the director of policy and advocacy at National Energy Action, said:

“The current cold spell is already having a devastating impact on the most vulnerable people.

“With unaffordable energy bills and far less support available nationally this winter, millions of people are already rationing their energy use to dangerous levels or getting deeper into debt trying to keep warm.”