British households face another increase in their energy bills from 1 July 2026, with Ofgem expected to raise the quarterly price cap by up to 8% when it publishes its Q3 decision in late May. For a typical dual-fuel household paying by direct debit, the increase would add approximately £120 to the annual bill, pushing average yearly energy costs to around £1,680 — still well below the peak of £2,500 seen during the 2022-23 crisis, but a significant reversal from the falls recorded in the first half of 2025, when wholesale prices had been declining steadily.
Why bills are rising again
The primary driver is wholesale natural gas prices, which have risen sharply since the outbreak of military conflict involving Iran in late February 2026. The Strait of Hormuz, through which approximately 20% of global LNG shipments pass, has faced disruption as tanker operators have rerouted vessels to avoid the conflict zone, adding days of transit time and pushing up freight costs. European gas storage — which entered winter 2025-26 at near-record levels — has drawn down more quickly than expected, and the prospect of a prolonged period of elevated supply-chain risk has pushed forward prices higher.
Ofgem’s price cap methodology means that changes in wholesale costs filter through to household bills with a lag of roughly three months. The sharp rise in gas prices in March and April is therefore feeding directly into the July cap calculation. Analysts at Cornwall Insight — who have consistently provided the most accurate advance estimates of cap changes — are forecasting an increase of between 6% and 9%, with the central estimate around 8%. The final figure depends on wholesale price movements in the final weeks of April and whether there is any de-escalation in the Middle East situation before the cap window closes.
Who is most affected
The increase will fall hardest on households in older, less well-insulated properties and those who have not fixed their tariff with a supplier. Around 22 million households in Great Britain are currently on variable tariffs tracked to the Ofgem cap, meaning they will see their bills rise automatically in July unless they switch to a fixed deal before then. Fixed tariffs currently available in the market are priced at a modest premium to the current cap but below the expected July level, making them potentially attractive for risk-averse consumers.
Energy support charities have warned that the increase will intensify fuel poverty pressures, particularly among pensioner households not covered by the government’s Warm Home Discount. The National Energy Action charity estimates that around 6.5 million UK households are currently in fuel poverty, a figure that could rise to 7 million if the July increase materialises as forecast. The government has not announced any targeted support measures in response to the expected July rise, though ministers have indicated they are monitoring the situation closely.
What households can do now
Energy switching activity has increased since the Iran conflict began, with comparison sites reporting a significant uptick in households seeking fixed tariffs. However, the number of competitive fixed deals on the market remains limited compared with the pre-2022 period, as suppliers remain cautious about taking on long-term price risk in the current environment. Households looking to reduce their exposure can also consider smart meter installation — which enables more accurate billing and access to time-of-use tariffs — or apply for the Energy Company Obligation scheme if they own an older, poorly insulated home.
— Sarah Mitchell, London Capital Post
