The price cap on British household energy bills will rise by 4 per cent to a three-year high of £1,723 from October, Ofgem announced on Wednesday. The increase adds £60 to a typical household's annual bill between October and December, following a 13 per cent rise in July. Wholesale gas prices have surged due to the ongoing conflict in the Middle East, pushing winter wholesale costs to their highest level in almost four years, according to Cornwall Insight. Gas storage remains at historic lows ahead of the winter demand season.

The further rise piles pressure on Prime Minister Andy Burnham and his Labour government, which has promised to reduce the cost of living. Energy Secretary Miatta Fahnbulleh acknowledged households face a "huge amount of pressure" but said the long-term solution is reducing reliance on fossil fuels. A VAT cut on electricity bills from October, estimated to lower the cap by £45, has been more than offset by rising wholesale costs.

Analysts expect the cap to climb further in January, with the Resolution Foundation forecasting a 12 per cent increase. Weaker wind generation — averaging 4,780 megawatts over the past two weeks, about 30 per cent below the previous fortnight — has increased dependence on gas-fired power, according to Tim Santonastaso of Argus Media.