Energy bills soar as inflation reaches 40 year high. What is up ahead for consumers?

Energy bills soar as inflation reaches 40 year high. What is up ahead for consumers?

These are worrying times for sure. Just after the Covid-19 pandemic, the energy crisis came in and saw energy bills rising steeply. And if that was not enough yet, the Ukraine war caused even more turmoil in the world. Energy bills soared to unprecedented heights and the global economy is expected to suffer from the recent developments. What is the current situation and the future outlook for consumers?

Inflation highest in 40 years

As we can see in the graph below, the inflation rate has been rising steeply since 2020. The cost of living has been increasing rapidly recently. More and more households have trouble paying their bills. The major cause of the rising inflation is the rising costs of energy. The recently updated Energy Price Cap won´t help that. The cap, that puts a maximum on what energy companies can charge to customers has risen 53% or £693 to £1,971 for direct debit plans. 

The graph below highlights the enormous increase in energy costs. The graph depicts the contribution how the contribution of housing to inflation rate is composed. It shows that rising electricity, gas and other fuels makes up around 2% of total inflation increase. In other words, around 25% of the entire inflation value can be ascribed to rising energy costs. 

What can consumers do to offset the negative impact?

Of course, a lot of the trends are out of your control. Putin starting a war or economic trends are something you do not have any influence on indvidually. However, to make the situation affect you less there are certain steps to take. For earning more, you could look at taking free or cheap online courses for relevant skills to your job. Or look at platforms like skillshare where you can learn new relevant skills by only paying a subscription fee to the platform rather than expensive course costs.  To save energy, there is a lot of things you can do. A short list down below. 

  • Wash clothes at low temperatures
  • Turn down the heater
  • Install smart appliances
  • Generate your own energy
  • Install a new boiler

Although the outlook is not bright, and the future with consequences of the war uncertain yet might be even less bright, there is always things you can do to decrease the impact on your personal life.

(Olivia Smith, Administrative Manager, papernest. The views and opinion expressed in this article are those of the author)


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