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UK Energy Bills Set to Hit 3-Year High in October Says Cornwall Insight

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UK energy bills are on track to climb by 4% starting in October, reaching their highest level since July 2023 on a unit-for-unit basis, according to Cornwall Insight's final forecast for the Default Tariff Cap released on Wednesday.

This upward pricing pressure is primarily fueled by ongoing market uncertainty surrounding the US-Iran conflict, which has pushed winter wholesale gas prices to their highest level in almost four years, it stated.

"Rising energy bills aren't welcome at the best of times, but with winter approaching, this latest hike will hit struggling households especially hard," said Craig Lowrey, principal consultant at Cornwall Insight.

"Driven by international conflict rather than domestic policy, it is a stark reminder that our energy bills remain tied to events thousands of miles away," Lowrey added.

The regional instability has disrupted European efforts to replenish gas storage inventories ahead of the winter season.

Compounding these geopolitical strains are high summer cooling demands driven by European heatwaves, extended maintenance outages in Norway, and robust Asian competition for liquefied natural gas cargoes, it stated.

The upcoming October hike will take effect despite a recent policy announcement by the government to remove Value Added Tax from household electricity bills, according to the statement.

According to market analysts, the scale of international wholesale market volatility has outweighed any savings delivered by the tax cut.

The analyst noted that the anticipated winter hike underscores Britain's deep vulnerability to international gas markets.

While short-term reliefs like VAT cuts help cushion the immediate blow, experts emphasize that long-term consumer protection will ultimately depend on accelerating domestic energy security and reducing reliance on volatile imported gas.

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