UK energy price cap to rise 4% as gas costs jump

26th Aug 2026 07:19

(Sharecast News) - Ofgem announced on Wednesday that the energy price cap will rise by 4% from October, meaning the average household on default tariffs will have to pay an additional £60 a year.

The price cap, which is designed to protect around 22m households on default tariffs by limiting the maximum rates and standing charges that energy suppliers can charge, has now been set at a three-year high of £1,723 for the period from 1 October to 31 December.

That followed a 13% jump in July to £1,663 as the energy regulator adjusted the cap to account for the energy spike caused by the war in Iran.

The latest increase "reflects higher wholesale gas prices as a result of the ongoing conflict in the Middle East, with volatile global gas markets remaining the dominant driver of price changes", Ofgem said in a statement.

Most of the increase in the price cap reflects an 8% rise in gas costs, slightly offset by the government's move to remove VAT from all domestic electricity bills.

"High international gas prices are continuing to drive energy costs in the UK. We welcome the Government's intervention to remove VAT from electricity bills, without which customers would have faced even higher costs this winter," said Ofgem's director general for market, Neil Kenward.

In a statement, the head of Citizens Advice, Clare Moriarty, said the latest price cap increase is "another sign of the relentless erosion of living standards across the country: energy bills are simply too high, prices leapfrog incomes, and debt levels continue to grow."

She called on the government to commit to funding a reformed energy support scheme for people in need, such as single-parent families and disabled people.

"We need further bold action to protect those most at risk of being trapped in cold, dark homes this winter."