Energy regulator Ofgem has confirmed energy costs will increase by two per cent. The new cost cap will take affect from October and last for the rest of 2025.
The increase means a household’s annual bill will rise to £1,755. The rise of two per cent was a surprise but a general increase wasn’t unexpected.
This news will only increase the pressure on homeowners and businesses as costs rise but it presents an opportunity to put an effective financial plan in place to mitigate and manage the cost changes.
What has impacted increased energy prices?
The rise in costs will continue to put a serious strain on families who are already feeling the pinch. With the changes taking effect in October, the increase will see energy bills rise over the winter months.
There are factors behind the cap increase including the costs to meet energy demands as well as Government initiatives planned during the colder months.
On top of this, with energy costs staying high, the UK has built up a £4 billion energy debt which has placed further strain on families.
How are rising costs affecting households and businesses?
Costs are spiralling as prices continue to increase. Households and businesses are feeling the financial pressures and with energy bills going up, there is sign of little respite.
As energy costs rise, inflation also remains high, rising to 3.8 per cent. The continued inflation rise is pushing food and fuel costs up meaning weekly shops and filling up the car is costing more and more.
Things are not looking great especially with inflation expected to hit four per cent in September, which is double the Bank of England’s two per cent target. The continue cost increases are leaving families with very little spare cash at the end of each month.
It’s not just families feeling the effects, businesses are also managing the harsh realities of continued high costs. The new energy cap will see operation costs for businesses increase, affecting revenue, turnover, cash flow and profit margins.
It is a difficult time for families and businesses with no signs of the financial pressures easing. However, there is support available and you can put measures in place to reduce the damage and have a clear picture of your finances.
What is the Government doing to support households?
The Government have emphasised their commitment to supporting families and households across the UK. Many pensioners will receive support via winter fuel payments after the Government reversed their original decision to axe the initiative.
Also in place is the Warm Home Discount which applies to anyone on means-tested benefits. Through the scheme, any individual or families that qualify will receive £150 discount on their bills.
However, the scheme will need to be funded by other billpayers, placing further strain on finances.
It’s unclear at this stage if other initiatives are being introduced by the Government have stressed, they want to help families especially with the colder months of the year on the horizon.
Can I put a plan in place to help manage costs?
With no signs of the rising costs stopping, it is leaving families and businesses with fewer funds to play with, and this can be extremely emotional and difficult to manage.
However, support is out there with finance experts on standby to help, build your confidence in your financial position and give you peace of mind so you can manage rising costs.
A sound financial plan will give you the tools to tackle costs and any changes in energy, food or fuel costs.
Looking to put a financial plan in place? Contact our team today.