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The increase is expected despite the Prime Minister's pledge to remove VAT from domestic electricity bills
Millions of households face another painful rise in energy costs just as temperatures begin to fall.
The increase threatens to wipe out the savings promised by the Government’s upcoming tax cut before families even receive them.
Cornwall Insight forecasts that Ofgem's energy price cap will rise by four per cent in October, taking the annualised bill for a typical household from £1,663 to £1,729.
This would be its highest level since July 2023 under Ofgem’s updated typical-use measure.
The increase is expected despite the Prime Minister's pledge to remove VAT from domestic electricity bills from the same month, a policy forecast to save a typical household around £45 a year.
However, rising wholesale costs linked to geopolitical tensions and extreme weather are expected to outweigh that reduction.
The new cap will remain in place for three months from October, just as colder weather means many households will turn their heating back on and use more energy.
Cornwall Insight said continuing unrest in the Middle East has been the main factor pushing up wholesale gas and electricity prices.
Uncertainty surrounding the conflict has kept global energy markets unsettled and costs higher.
Heatwaves across Europe have added further pressure, with power stations using more gas to meet increased demand for air conditioning and cooling.
Together, higher wholesale prices and weather-driven demand are expected to outweigh the savings offered by the Government’s VAT cut.
Using Cornwall Insight’s previous method, the October price cap would rise from £1,862 to £1,941 a year.
However, the consultancy now uses Ofgem’s updated definition of a typical household, which reflects the fact that consumers are using less energy. Under this measure, the cap is forecast to rise from £1,663 to £1,729.
Dr Craig Lowrey, principal consultant at Cornwall Insight, warned that the increase would arrive at a particularly difficult time.
He said: "Rising energy bills aren't welcome at the best of times, but with winter approaching this latest hike will hit struggling households especially hard."
He stressed that international events, rather than domestic policy choices, are dictating what British families pay.
"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," he added.
Dr Lowrey argued the situation underscores the urgent case for weaning Britain off imported natural gas.
"While temporary relief like VAT cuts help soften the blow, they don't touch the underlying fact that Britain is heavily dependent on imports of natural gas," he said.
A Government spokesman said the administration remains focused on easing the cost-of-living burden, acknowledging that families will be anxious about the prospect of dearer energy this winter.
"We're acting to give consumers breathing space with the cost of living cutting VAT on energy bills, ensuring around six million households get the £150 warm home discount this winter, and making millions of homes cheaper to run through our warm homes plan," the spokesman said.
The Government also pointed to its diplomatic efforts in the Middle East as part of a broader strategy to protect bill payers from volatile global markets.
"Alongside our efforts to support rapid de-escalation in the Middle East, we will do everything we can to shield consumers from global energy shocks and bring down bills for good," the spokesman added.
A government spokesperson said: "Tackling the cost of living remains a key priority for this government and we know families will be worried by the prospect of higher energy bills this winter.
"We're acting to give consumers breathing space with the cost of living – cutting VAT on energy bills, ensuring around six million households get the £150 Warm Home Discount this winter, and making millions of homes cheaper to run through our Warm Homes Plan.
