Energy Prices Fall as Inflation Hits 3-Year Low
UK inflation increased at its lowest pace in nearly three years thanks to the energy cap keeping energy prices down. According to the Office for National Statistics, consumer prices rose just 1.5% during October, compared to 1.7% in September.
The Office for National Statistics is the executive office of the UK Statistics Authority. The body consists of a non-ministerial department reporting directly to Parliament.
Inflation Decreases as Ofgem Lowers Price Caps
Energy regulator Ofgem announced their lowering of the price caps for last month in August. Ofgem said the Default Tariff Price Cap would decrease by 6% (£75). That would lower the cap to £1,179 per year for the six months effective from the beginning of October. The pre-payment meter cap will also fall from £1,242 to £1,217 per year for the same period.
Ofgem said UK energy bills will fall this winter for millions of households who are protected by the price caps. They explained their decision in a statement:
“Wholesale energy prices have significantly fallen between February and June [in 2019]. A combination of low demand during the winter, strong gas supply and relatively healthy storage levels have pushed down wholesale prices, resulting in the reduction of both caps.
“The wholesale energy cost element of the default tariff cap fell by £75 to £446 while other costs, such as VAT and supplier profits, fell slightly. These reductions offset cost increases totalling £7 of other elements such as operating costs, network charges and environmental schemes, resulting in an overall reduction of £75 in the level of the default tariff cap.”
Wholesale Savings Should be Passed Onto Customers
The Chief Executive of Ofgem, Dermot Nolan said the price caps should mean suppliers pass on wholesale savings to customers.
Mr Nolan said of his organisation’s price cap decrease:
“[It] means the energy bills of around fifteen million customers on default deals or pre-payment meters will fall this winter to reflect the reduction in cost of the wholesale energy. These customers can be confident that whatever happens, the price they pay for their energy reflects the costs of supplying it.
“Households can cut their bills further in time for winter, and we would encourage all customers to shop around to get themselves the best deal possible for their energy.”
Inflation Decrease Aided by Average Earnings Increase
The Office for National Statistics also revealed that average earnings increased by 3.6% in the three months to September. Additionally, October’s inflation number was lower than the 1.6% predicted by economists. However, the Bank of England cautioned that inflation could slip to 1.25% early in 2020, missing its forecasted target of 2%.
To learn more about different energy suppliers and tariffs available to your business that could lower your energy bills this winter, contact Business Save and their team of highly experienced energy experts.