London: UK regulators on Thursday slashed a cap on domestic energy bills from July, easing a cost-of-living crisis one day after data showed a slowdown in elevated inflation.
Ofgem said the annual amount suppliers are able to charge an average household would drop to 2,074 pounds ($2,564), citing “recent falls in wholesale energy prices”.
The previous cap was set at 3,280 pounds but government subsidies had limited the typical bill to 2,500 pounds in a bid to cushion consumers from the squeeze on living standards.
- Saudi home buying activity takes a dive as surging prices eat away at demand
- Emirates relaunches Skywards Everyday app, here's how you can earn Miles faster
- UAE’s renewable energy capacity is building up nicely, but grid stability needs constant watch
- Dubai's Majid Al Futtaim taps $500m 'green sukuk' to refinance $800m bond payment
The attack on Ukraine by key oil and gas producer Russia in February 2022 sent energy prices and wider inflation soaring, and this in turn sent governments scrambling to shore up supplies while subsidising domestic bills.
In recent months, however, energy prices have slumped on easing supply concerns thanks to warmer weather in Europe and as nations become less dependent on Russian oil and gas.
“Today’s update means that, for the first time since the global gas crisis took hold more than 18 months ago, prices are falling for customers on default tariffs,” the energy watchdog added in a statement.
Thursday’s news means taxpayers will no longer be subsidising energy bills because the cap is cheaper than Prime Minister Rishi Sunak’s so-called energy price guarantee.
Annual UK inflation struck a 13-month low in April, official data showed Wednesday, but still remains elevated at 8.7 per cent as soaring food prices offset weaker energy costs.
The rate slowed from 10.1 per cent in March, falling below double digits for the first time since August last year.
Ofgem CEO Jonathan Brearley said Thursday it was “encouraging” to see the energy market stabilising - and prices moving downwards after a “difficult” winter.
“People should start seeing cheaper energy bills from the start of July, and that is a welcome step towards lower costs,” he said.
“However, we know people are still finding it hard, the cost-of-living crisis continues and these bills will still be troubling many people up and down the country.”
The regulator is urging people who are struggling to access support measures including payment plans and hardship funds.