‘Prepayment customers will be looking to top up meters with £500 next January’

Energy bills are set to triple as British households face an "almighty hit" to living standards, economists have warned.

- ANNA ISAAC

The average household could face a bill of £500 for energy in January next year, with a prediction of an annual price cap of £3,850, far exceeding already gloomy predictions for rising bills made earlier this year.

The forecast, by utilities consultancy BFY Group, came as Russia took further steps to slash its gas supplies to Europe, strangling the market even further.

The country has drastically reduced gas supplies to several European states since waging war on Ukraine. The bitter conflict has upped pressure on global food, petrol and domestic energy costs.

“If you look back at the same time last year, your bill is likely to be three times what you would have been paying in January,” Gemma Berwick, a senior consultant at BFY, told The Independent. The projections have added to economists’ concerns about the depth and length of the cost of living crisis.

In the next two years, inflation will eat into living standards at a rate not seen since at least the 1950s, said Paul Dales, chief UK economist at Capital Economics. “There’s an almighty hit for households’ spending power coming down the line,” he said.

Disposable income, a measure which works out the amount of money households have left after paying for essentials, will drop by 3 per cent this year, and by 2 per cent next year, according to Mr Dales. “This hasn’t fallen by more than 2 per cent in a calendar year since 1955,” he said.