Households face slightly higher energy costs from the new year after Ofgem unexpectedly announced the average annual energy bill will rise by 0.2%.

Major forecaster Cornwall Insight had predicted a 1% drop, but the regulator ofgem imposed a higher cap for Scotland, England and Wales.

From January to March, a typical dual-fuel household will pay £1,758 a year, up from the current £1,755 cap.

The rise will attract critics of the Labour government which promised lower bills, though the increase is only 28p a month and the cap is lower than the same period last year.

It is also likely that households will pay less in January as the Chancellor is tipped to remove VAT on energy bills in next week’s Budget. This would cut approximately £80 from January.

However, prices are expected to rise again from April, wiping out that cut. Dr Craig Lowrey, principal consultant at Cornwall Insight, said: “Bills are still well above pre-crisis levels and are set to climb again in April, and this time it’s not higher wholesale prices driving the rise.”

Wholesale prices, which make up the largest share of the cap, have fallen 4% over the past three months but remain volatile due to global events. The regulator said the price cap has risen in spite of this partly because of government policy. This includes climate and nuclear levies.

Minister for Energy Consumers Martin McCluskey said: “We know that energy bills remain too high. That is why we are taking immediate action, with millions more families receiving £150 off their bills through the expanded Warm Home Discount scheme this winter.

“We are taking the long-term action needed to bring down bills for good with the government’s clean power mission. We are also delivering our new golden age of nuclear, with cheaper, clean electricity to power millions of homes, kick-start economic growth and create thousands of jobs.”

Tim Jarvis, Director General, Markets, at Ofgem, said: “While energy prices have fallen in real terms over the past two years, we know people may not be feeling it in their pockets.

“The price cap helps protect households from overpaying for energy. But it’s only a safety net and there are practical ways that customers can pay less for their energy.

“Look at different tariffs and choose what’s right for you or change the way you pay to Direct Debit or smart pay-as-you-go. Prepayment remains the cheapest way to pay, and these customers are already saving around £47 on average.

“While wholesale energy costs are stabilising, they still make up the largest portion of our bills which leaves us open to volatile prices. That’s why we’re working with government and industry to boost clean energy and reduce our reliance on international sources we can’t control.”