Energy bills for a typical household will rise by 1.2% or £21 a year in January following the latest price cap announced by Ofgem.

The watchdog’s decision means those paying by direct debit and using a typical amount of gas and electricity will pay £1,738 a year.

It will be the second consecutive quarterly rise following the hike in prices in October.

Ofgem said the new cap will be £190 lower than in January 2024 and 57% less than in January 2023 when prices were impacted by the war in Ukraine.

But bills will remain far higher than before the start of the war in February 2022 when prices stood at £1,216.

The cap sets a limit on the cost of each unit of energy, and affects 27 million households in England, Wales and Scotland.

Tim Jarvis, the director general of markets at Ofgem, said: “While today’s change means the cap has remained relatively stable, we understand that the cost of energy remains a challenge for too many households.

“However, with more tariffs coming into the market, there are ways for customers to bring their bill down so please shop around and look at all the options.

Retail sales fall

Retail sales volumes are estimated to have fallen by 0.7% in October 2024, following a rise of 0.1% in September 2024 (revised down from 0.3%), according to official data published this morning.

The strongest subsector fall was clothing stores, which fell by 3.1% over the month. Non-food stores sales volumes – the total of department, clothing, household and other non-food stores – fell by 1.4% following a rise of 2.3% in September.

Retailers across a range of industries suggested that low consumer confidence and uncertainty around the Budget announcement affected sales. More broadly, sales volumes rose by 0.8% in the three months to October 2024, when compared with the three months to July 2024.