Cornwall Insight analysts have lifted expectations for January’s energy price cap, citing geopolitical issues such as the outbreak of war between Israel and Hamas.
Having previously tipped in September that Ofgem would set its January price cap at £1,898, Cornwall Insight revised the figure to £1,923 on Thursday.
Though a small hike, it marks analysts’ expectations that recent growth in wholesale prices on geopolitical issues such as the Middle East conflict, strikes by gas workers in Australia and damage to a pipeline between Finland and Estonia will start to weigh on households.
“The jump in price cap predictions since September has once again highlighted the vulnerability of UK energy prices,” principal consultant Craig Lowrey commented.
“As we saw with the Russian invasion of Ukraine, there is a delicate balance in the global energy market which can easily be disrupted by unexpected events, and it looks as though the situation in the wholesale markets may to some extent be repeating itself.”
Ofgem's price cap, which Cornwall Insight expects to rise once again in April, effectively governs how much suppliers can charge for energy.
Displayed as the total an average household would pay over a year on current rates, the cap sets a maximum on what can be charged per unit of gas and electricity respectively.
This is revised every three months, with prices having fallen steadily this year to £1,834 in October, after hitting record highs last winter.
Cornwall Insight repeated calls over the UK energy market’s need for domestic, renewable generation to shield from global events.
"The government needs to take steps to proactively limit the impact that such situations have on the UK's energy market, and already stretched households, rather than reacting to events as they occur,” Lowrey added.