Interest rate fears as gas prices surge
Centrica hikes prices by record 35 per cent in move that will further squeeze consumers
British Gas owner Centrica said yesterday it would raise gas prices by a record 35 per cent and electricity prices by 9 per cent as it passes on rising energy costs to householders.
The country’s largest energy supplier, with 16m customers, said the move would take place immediately – after revealing its half-year operating profits from its residential gas business plunged 69 per cent to £166m from a year ago.
Centrica’s price hike comes just a few days after rival EDF Energy put up gas prices by 22 per cent and electricity prices by 17 per cent, with other power firms expected to follow suit.
British Gas managing director Phil Bentley said: “We very much regret that we have had to make this decision at a time when many household budgets are already under pressure.”
Soaring energy prices have cost British Gas an extra £2bn over the last year, leading it to pass on costs to consumers.
Analysts said these hikes may further stoke inflation, increasing the pressure on the Bank of England to hike interest rates at a time when it is also trying to head off recessionary pressures.
Capital Economics economist Paul Dales said if other energy suppliers mirror these increases the consumer price index would rise by 0.6 per cent, pushing it from 3.8 per cent to 4.4 per cent in August. Dales said: “The news that British Gas became the second utility supplier to raise its price means that inflation is likely to rise further and faster then we previously expected.”