Energy prices are expected to fall to a two-year low come April as wholesale costs recede, according to Cornwall Insight analysts.
Ofgem’s price cap, which determines household bills, will likely sit at £1,635 per annum from April, 15% lower than the current level of £1,928.
“The UK has, for now, weathered the storm of Red Sea tensions, securing a steady supply of liquified natural gas through the Atlantic,” Cornwall Insight said.
“Good availability of cargoes in Europe and Asia, in part due to mild weather, has contributed to the drop in prices.”
Cornwall Insight’s latest prediction is lower than previous estimates, with electricity set to cost 23.27p and gas 5.96p per kilowatt hour under the forecast.
Daily standing charges will sit at 58p and 30p per respective fuel in Cornwall Insight’s view, with this including provisions for energy suppliers to recoup debt - though such a move is yet to be confirmed by Ofgem.
Historically high energy bills had been a contributor to the UK’s 4% rate of inflation in January, with analysts seeing lower bills as likely feeding through to slowing price rises later this year.
Uswitch director Richard Neudegg explained price falls would still take a while to feed through to households though, given the new cap will run from April 1.
"Positive though today’s prediction is, it can’t help households save on heating their homes just yet," he said.
“Prices are forecast to fall again in July, but the market remains unpredictable, and it is hard to know how energy rates will look when usage climbs again in winter.
“With more than just a glimmer of hope on the horizon for wholesale energy costs, all eyes are now on suppliers to see how they will price their other deals."