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August 2021 energy prices update #2

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In our second August 2021 energy prices update, we look at the continued rises in wholesale costs, and what they mean for homes and businesses.

The grim news for household finances continues. Wholesale energy prices, which have been steadily climbing since this time last year, have continued their upward trend since our last price update earlier this month.

What impact are price rises having on options for households?

The short answer is, unless you’re in a long-term fixed price contract, your bills are going to go up. The focus for most households should be on limiting their exposure to higher prices, while leaving themselves room to shift if wholesale prices fall.

Broadly speaking, the advice we gave in our last pricing update still stands, but customers should be especially alert to the impact of the energy price cap on projected savings.

Ofgem recently announced that the price cap, which limits the prices suppliers can charge customers on ‘standard variable’ tariffs, will increase from October by £139 for a typical home. Even since that announcement – and at least a month before that change comes into effect – the fixed price offers that have traditionally offered the most competitive options for households are already catching up with the increased cap. This means that households who wait until the price cap rise kicks in, increasing their standard variable tariff, may find that the fixed price alternatives available at that point look pretty unappealing.

Rather than wait, it may be worth looking at the fixed rate deals currently on the market, and choosing one that has low exit fees, leaving you the room to take advantage of falls in wholesale prices, though these currently look unlikely as we enter the colder autumn months.