Energy bills are expected to fall below £2,000 before winter but food inflation is ‘likely to remain high’, Bank of England says
- Ofgem’s price cap is expected to fall to around £1,900 per year from October
- But the Bank predicts that inflation, which peaked in March, will remain high
Energy bills are expected to fall to below £2,000 ahead of the winter, the Bank of England predicted.
It expects Ofgem‘s price cap, which sets the maximum amount suppliers can charge for gas and electricity, to ‘fall a little further from October to around £1,900 per year’.
This would be the first time the price cap has been below £2,000 since April last year for those on default tariffs paying by direct debit.
The Bank predicted that the scale of the decline in prices means that electricity and gas will become a ‘drag’ on inflation, knocking off around 1.1 per cent from the overall figure in the final three months of this year.
The Bank of England has said it expects Ofgem’s price cap to fall to around £1,900 per year from October
But food inflation, which peaked at 19.1 per cent in March, is still expected to remain high for the rest of the year
The Bank said food price inflation, which hit a peak of 19.1 per cent in March and was still hovering at around 17.3 per cent in June, ‘appears to have peaked’ but is ‘likely to remain high’ for the rest of the year.
This means lower-income families, who spend a larger portion of their income on food, are unlikely to see much respite from higher grocery bills.
The UK Consumer Prices Index (CPI) inflation was 7.9 per cent in June, down from 8.7 per cent in May, according to the Office for National Statistics (ONS).
The Bank predicted a wider drop in inflation to about 4.9 per cent by the end of this year.
