The average household energy cost would decrease by about 400 pounds ($495) a year starting in July, according to a statement from Britain’s energy regulator on Thursday. Millions of consumers and businesses that have had to pay dramatically increased energy and gas bills over the past 18 months will feel some relief as a result of the decline. But as food prices rise at the quickest rate in decades, many people on lower incomes are still suffering from a chronic cost of living crisis.
The Office of Gas and Electricity Markets, or Ofgem, announced that it would reduce its pricing cap, which limits the amount that gas suppliers can charge homes for a unit of energy, to 2,074 pounds ($2,567) annually as of July 1. Since October, the British government’s “energy price guarantee,” a subsidy that set the average household bill at 2,500 pounds a year, has helped protect families from gas price increases.
The U.K. energy regulator stated, “While the price cap has decreased from its winter peak, it remains well above the pre-2021 average, and many people will still find such high bills difficult to pay.” It stated that in order to help the most vulnerable individuals throughout the upcoming winter, the government and the energy sector must collaborate. The inflation rate plummeted to 8.7% in the year to April, according to the national statistics agency of Britain, which was the first time since August that it was below double digits. However, the decline wasn’t as significant as expected, and food inflation was quite close to records
Following Thursday’s news, the typical consumer will spend 426 pounds less annually, or a decrease of approximately 17%. Although energy costs are still almost twice what they were in 2020, this provides some relief for many. Energy costs soared globally as a result of the COVID-19 pandemic recovery and later Russia’s invasion of Ukraine. As Europe had a warm winter and secured natural gas supplies outside of Russia, while demand was being weighed down by a sluggish global economy, they have been declining since last summer.
According to official data, food prices increased by 19.1% over the previous year, with increases for commonplace items like milk and eggs being considerably more pronounced. “We’re on the right track, but there is no room for complacency,” Treasury Secretary Jeremy Hunt said on Wednesday. Although things are difficult today, they will improve.
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