Price cap announcement: Fears of soaring energy bills amid interest rate rise

Average energy bill could hit £1,915 with interest rates expected to be raised by 0.25 per cent

UK energy regulator Ofgem is expected to announce on Thursday that the energy price cap is to rise by 50 per cent because of soaring wholesale gas prices, meaning the average bill could hit £1,915 ($2,597).

British Chancellor Rishi Sunak will announce support to ease the pressure on millions of households facing soaring energy bills, The Times reported.

Mr Sunak will commit to giving households in council tax bands A to C rebates funded by government grants under measures for poorer families.

The Treasury did not rule out the move or deny that the Chancellor could announce state-backed loans to give all homes a discount on their energy bills of £200.

British Prime Minister Boris Johnson is under huge pressure to ease the cost of living, with his leadership under threat over lockdown parties at Downing Street.

But the new support is unlikely to be enough to stop energy bills rising significantly for most people.

Also on Thursday, the Bank of England is widely expected to raise interest rates from 0.25 per cent to 0.5 per cent, with its forecasts likely to show rampant inflation this spring.

Expert analysis suggests Ofgem’s review of the price cap, which will affect about 22 million households, will lead to bills soaring by 50 per cent.

The rise will come into force from April 1, when the price cap on energy bills is updated for the next six months.

The energy regulator’s announcement had been scheduled for Monday but officials, without stating why, decided to move it to 11am on Thursday.

“We recognise people are facing pressures with the cost of living, which is why we are providing support worth around £12 billion this financial year and next," a spokeswoman said.

“We will provide an update in due course on further help for households across the UK to meet their energy costs in the face of rising global gas prices.”