Cost of living crisis: Bank of England calls for wage restraint as inflation soars – business live | Business

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With the UK’s cost of living crisis worsening, energy regulator Ofgem is proposing to adjust the price cap on bills twice as frequently, to address the volatility in the market.

A day after British households were hit with the news that average bills will rise by nearly £700, Ofgem kicked off a consultation on a proposal to switch from half-yearly to quarterly price cap updates.

Currently, the cap on what suppliers can charge only increases every six months.

Jonathan Brearley, CEO of Ofgem, told Radio 4’s Today Programme.

We have seen an extraordinary event in the energy market over the last few months. Something that’s a one in 30-year event.

We’ve seen volatility and change in prices far above what has been expected and what is historical.

That volatility led to a flurry of companies collapse since last summer, as they couldn’t pass on the jump in wholesale electricity and gas prices to consumers.

Having hiked the price cap by 54% on Thursday, Brearley is now looking to the future, warning that the UK’s regulatory package needs to change.

The difficult news for all of us is that this volatile market might be with us for some time.

Adjusting the price cap more frequently means when price go up, the cap goes up — meaning households would be hit earlier by changes in the wholesale market.

But when prices come back down again, so would the cap, Brearley argues.

And in the long-term, the real way for the country to escape this volatility is to diversify its energy sources and push harder on getting to net zero target.

The energy price crunch prompted chancellor Rishi Sunak to announce yesterday that 28 million electricity customers will have £200 knocked off their bills in October.

But the money must be repaid in £40 annual instalments over the next five years, and has been criticised as a “ buy now pay later” scheme.

Council tax payers in England in bands A to D will receive a rebate of £150 from their bills in April, which will not have to be paid back, while separate sums have been set aside for devolved governments in Scotland, Wales and Northern Ireland.