Martin Lewis has issued a grim warning over the next energy bills price cap change, explaining that it is unlikely the October Price Cap will fall back to today's level after the 13% rise in July. The money saving expert took to social media to discuss what may happen to the October Price Cap following the energy Price Cap rising by 13% in July.
Why the July Price Cap Rises
Each Price Cap is calculated using average wholesale energy prices over a three-month assessment period. Martin Lewis explained that the July Cap will rise due to the Middle East conflict beginning during that period. He said: “The July Cap will rise 13% because the Mid-East conflict started during it, yet it was cushioned a little as the first few weeks of that period were pre-war.”
October Price Cap Outlook
Although wholesale gas prices have begun to fall, the wholesale prices behind October are still much more expensive than those behind today's Price Cap. As the October Price Cap is based on average wholesale prices over a three-month period, many of those higher prices have already been factored into the calculation, making a return to today's rates unlikely. Lewis added: “The real question isn't whether the Oct Cap will drop back to April's rate, its about whether it will be any cheaper than the hugely increased July rate. My guess, it will be pretty similar.”
Advice for Consumers
The expert urged those on standard variable tariffs to consider fixing now rather than waiting. He pointed out that some fixed deals are currently around 4% cheaper than today's Price Cap and argued they could offer greater savings once the July increase comes into effect. Lewis concluded: “This is why, as you can fix today at 4% below the April Cap, never mind what the Cap will jump to in July, I'm saying if you're on the Cap get off it. You can do a full comparison at cheapenergyclub.com to see your savings. Remember though they're compared to today's Cap not the higher July one.”
