It has been confirmed that energy costs will increase by two per cent from October, affecting both households and businesses.
The increase was much more than analysts had expected, meaning a household’s annual bill will sit at £1,755, up £35 a year on the current cap.
The change will last for three months before Ofgem will assess again and decide to maintain or adjust the cap.
It’s an increasingly worrying time for homeowners and businesses as costs continue to rise, which is why it’s so important to plan and prepare for any cost changes.
A sound financial plan gives you a clear picture of your expenditures and peace of mind knowing you have the capacity to manage any changes.
What does the rise in energy costs mean?
As costs increase this October, bills will be higher over the winter months, meaning heating and powering your home and business will cost more.
Families and businesses across the UK are already stretched as costs continue to rise. The new cap works out at adding an extra two pounds to every £100 you currently pay.
The rise in energy costs is cited by higher costs to transmit energy to meet demand, and the support measures introduced by the Government for the winter months.
The continued high costs mean households are likely to continue struggling to pay their bills, and this isn’t helped by a £4 billion energy debt built up due to the high energy costs.
The impact of rising costs on households and businesses
As costs continue to rise, the impact on households and businesses grows. The upcoming energy price increase is the latest bit of bad news as costs continue to spiral.
This follows on from inflation rising to 3.8 per cent in July, which is pushing the price of food and fuel up. Food costs are alarmingly high, with products such as chocolate, eggs, instant coffee, and fresh orange juice rising significantly.
Increasing bills for households are pushing their finances to the limit, and signs are pointing towards inflation surpassing four per cent in September, double the Bank of England’s two per cent target, which suggests costs will continue to rise.
Businesses are also feeling the pinch as increased energy bills put a strain on operational costs and affect both turnover and revenue. Increased operational costs reduce profit margins and limit cash flow, leaving businesses in a difficult position.
The realities of increased prices are harsh, and everyone is feeling the pinch. However, you can mitigate the costs by analysing your finances and putting a plan in place.
Are the Government providing support?
The Government reversed the winter fuel payment scheme after fierce backlash earlier this year. This will support pensioners across the UK, and they are keen to help families.
An initiative that is in place is the Warm Home Discount, which applies to anyone on means-tested benefits. They will receive a £150 discount on their bills, but it’s likely other billpayers will need to contribute to fund the support.
The Government has emphasised they want to help families, but at this stage, it remains unclear what initiatives will be introduced. Households will have to prepare as best they can, explore the market for better deals, and seek financial advice.
How can I prepare for higher energy bills?
With costs continuing to spiral upwards, it is putting a serious strain on families and businesses. It is a difficult time as people come to terms with the rising costs, but help and support are out there, so you can feel confident in your financial position.
Financial experts are ready to help you. They can offer you tailored advice and support so that you can understand your current financial position, put a plan in place to manage rising costs, and analyse opportunities to save money where you can.
They give you the tools to feel secure and give you the confidence to face future cost changes, knowing you have full scope on your finances.
If you’re concerned about rising prices, get in touch today for tailored advice and support.