The energy price cap will rise by 2% (around £35 a year for a typical household) from 1 October, Ofgem has announced.

This means the energy bill for a typical household not on a fixed tariff will be £1,755 a year, which is almost £500 higher than it was in October 2021, before the energy crisis.  According to Ofgem, latest figures show 37% of households are on fixed tariffs.

The campaign group National Energy Action said the price cap rise could have a “huge impact” on some households.

Michael Penhaligon, National Energy Action Energy Adviser, said: “Some may say that the cap rising around £35 won’t have an impact but the people I speak to already can’t afford their bills and many of them are deep in debt.

“This can have a huge impact on their mental and physical wellbeing. A rise in bills just as temperatures start to drop will put even more pressure on households.

“Every day my colleagues and I speak to people in desperate circumstances. They can’t afford the very basics of heat and power. They are rationing their energy usage and they’re cutting back on food and other essentials.

“The individuals I speak to are left to rely on foodbanks, fuel vouchers and other charitable grants to help restore them to a basic standard of living. This shouldn’t be happening in the UK in 2025. “

Tim Jarvis, Director General, Markets at Ofgem, said: “While there is still more to do, we are seeing signs of a healthier market. There are more people on fixed tariffs saving themselves money, switching is rising as options for consumers increase, and we’ve seen increases in customer satisfaction, alongside a reduction in complaints.

“While today’s change is below inflation, we know customers might not be feeling it in their pockets. There are things you can do though – consider a fixed tariff as this could save more than £200 against the new cap. Paying by Direct Debit or smart pay as you go could also save you money.

“In the longer term, we will continue to see fluctuations in our energy prices until we are insulated from volatile international gas markets. That’s why we continue to work with government and the sector to diversify our energy mix to reduce the reliance on markets we do not control.”