(Bloomberg) --

Soaring U.K. inflation will get an extra push next year when the energy regulator adjusts a price cap for household gas and power, adding pressure on consumers already paying higher costs for food and fuel as the economy recovers from the pandemic. 

Starting in April, energy bills for millions of households likely will increase when regulator Ofgem revises its cap to account for the surging prices of natural gas and electricity. Ofgem will decide the specific amount in February, based on prices from the previous six months. 

“There’s no doubt the price cap is going to go up,” said Ellen Fraser, a partner at consultancy Baringa Partners. “It’s going to strain household finances.”

U.K. Inflation Surges to Highest in a Decade on Energy Costs

The ceiling likely will spike to at least 1,800 pounds ($2,419), an increase of more than 40% from the 1,277 pounds that suppliers currently can charge for default tariffs, Fraser said. Ofgem hasn’t announced how much it plans to raise the cap, but Chief Executive Officer Jonathan Brearley said last month the increase would be significant.

The expected increase will take effect at the same time the government raises the National Insurance payroll tax.

In August, Ofgem raised the cap by 12% for the period from October to March. Since then, the price of gas in the U.K. has more than doubled. The surge left many energy suppliers unable to raise prices enough to account for the increased costs, and that helped put 20 energy suppliers for more than 2 million households out of business.

Companies taking on those new customers currently absorb the rising costs. But starting next fall, some of those expenses will be spread out on everyone’s bills. If more suppliers go under, those bills will get even higher.

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