LONDON: UK energy regulator Ofgem on Thursday announced that the price cap on how much suppliers can charge consumers will rise by 54 percent due to soaring wholesale gas prices, sending bills spiralling.
The regulator announced the energy price cap for those not on a fixed deal with their supplier will rise by £693 ($939, 832 euros) to £1,971 in England, Wales and Scotland from April.
Northern Ireland has a separate regulator and has also announced sharp hikes in average household gas bills.
UK inflation rose to a near 30-year high in December and the rise in household bills will stoke further fears about a cost-of-living squeeze, with government tax rises also planned for April.
"We know this rise will be extremely worrying for many people, especially those who are struggling to make ends meet, and Ofgem will ensure energy companies support their customers in any way they can," said Ofgem chief executive Jonathan Brearley.
"The energy market has faced a huge challenge due to the unprecedented increase in global gas prices, a once in a 30-year event," he added.
"Ofgem's role as energy regulator is to ensure that, under the price cap, energy companies can only charge a fair price based on the true cost of supplying electricity and gas."
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The soaring wholesale prices are blamed on a cold European winter in 2020-2021, which put pressure on supplies, increased demand from Asia for liquefied natural gas and a number of broader geopolitical issues.
The cap is reviewed every six months, and the new regime will come into force from April 1.
The government has been urged to take action, and finance minister Rishi Sunak was expected to announce a support package, including rebates for poorer households, according to The Times.
Prime Minister Boris Johnson, already rocking over lockdown-breaking parties in his Downing Street office, is under pressure to get the cost-of-living crisis under control.
Adding to the problem, the Bank of England was on Thursday expected to raise interest rates from 0.25 percent to 0.5 percent as it attempts to tame rampant inflation.
Richard Walker, managing director of supermarket chain Iceland, told BBC radio that 2022 "is probably set to be the hardest year ever for many UK families".
"We are talking about energy prices and costs directly affecting consumers but that is also going to have a huge knock-on effect for businesses too. In terms of grocery retail, every supermarket will be raising its prices," he said.
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