Energy prices are expected to drop in July, marking a reversal of three consecutive increases in Ofgem’s price cap.
According to analysts at Cornwall Insight, the typical annual energy bill for households using a standard amount of gas and electricity will fall by £166, or nearly 9%. This decrease follows price hikes in April, meaning a dual-fuel customer paying by direct debit can expect to pay £1,683 annually.
It’s important to note that the price cap, which is set by Ofgem every three months, reflects the cost per unit of energy. So, if your energy use increases, your bill will also rise.
Uncertainty Ahead for Energy Prices
The energy price cap affects around 22 million households in England, Wales, and Scotland. Ofgem sets the cap every three months, which can lead to changes in annual bills. They calculate the impact based on average energy use.
Between July and September 2024, the typical annual bill was £1,568. After three increases, the price cap reached £1,849 in April 2025. If the predicted 9% drop happens in July, the bill would decrease to £1,683, the lowest since September 2024.
“There’s always a chance that prices could go up again quickly,” said Craig Lowrey, Principal Consultant at Cornwall Insight. “Energy markets are unpredictable, and changes in global events or the market can cause prices to rise. We can’t guarantee these reductions will last.”
The expected drop in prices is largely due to lower wholesale energy costs, affected by US tariffs and unusually mild weather in Europe.
Long-Term Stability Remains a Concern
Despite the expected decrease, experts warn that the only real way to protect households from the ongoing cycle of price changes is to reduce dependence on international wholesale energy markets.
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