Households will pay more on their energy bills from October after Ofgem raised its price cap by 4% to a three-year high.

The regulator said the price cap will rise by £60 per year – or £5 per month – to £1,723 for the average household using both electricity and gas if this level was sustained for a year.

It means, in short, that the average annual energy bills will rise by £60 for a typical household in October.

The rise is a blow to millions of households struggling with the cost of living as inflation remains stubbornly high.

While experts have warned households should brace for a double blow, with October’s rise in the energy price cap will likely be followed by another hefty increase in January.

Ofgem's price cap, set every three months, puts a limit on how much suppliers can charge per unit of energy, so homes that use high amounts of energy will pay more than the typical figure announced, and households which use less energy should pay less.

October's price cap will cover the period from 1 October to the end of this year.

The next cap, covering 1 January 2027 to 31 March 2027, is due to be announced on 25 November.

Ofgem said the increase reflected higher wholesale gas prices as a result of the ongoing conflict in the Middle East, with volatile global markets remaining the dominant driver of price changes.

Neil Kenward, Ofgem’s director general for markets, said: “High international gas prices are continuing to drive energy costs in the UK.

“We welcome the Government’s intervention to remove VAT from electricity bills, without which customers would have faced even higher costs this winter.

“Savings are available by choosing a fixed tariff, which are available at £100 or more below the October price cap, and many suppliers offer tariffs with cheaper electricity to smart meter customers for electricity consumed out of peak times.

“It’s also worth considering different payment methods, with prepayment customers paying the lowest price cap rates, and could save consumers an average of about £45 compared to direct debit.”

Energy Secretary Miatta Fahnbulleh, MP for Peckham, pledged more Government support on bills, particularly for people on low incomes.

“What we are clear about is that there is a baseline set of things that we need to do to drive down energy bills for everyone, because everyone is struggling with the cost of energy,” she told Times Radio.

“In addition to that, we know that families on low income, families who are feeling the most amount of pressure, are the most exposed, and therefore we have to provide additional support for them.”

Andy Burnham has already cut VAT off electricity bills.

But experts at Cornwall Insight warned October’s rise in the energy price cap will likely be followed by another hefty increase in January.

Cornwall is forecasting a 9% jump on January 1, which would take the cap up another £149 to £1,872.

Craig Lowrey, principal consultant at Cornwall Insight, said: “Households will see rising energy bills going into winter, with the risk that, unfortunately, January will bring even more hardship.

“What is frustrating is these rises, as we have seen time and time again, have very little to do with what is happening in Britain.”

He added: “Where January bills land will depend on whether the situation in the Middle East calms down in the next couple of months.

“However, even if we saw an end to the conflict, lower stocks going into winter as demand increases mean falling bills in January is unlikely.”