Martin Lewis has advised anybody worried by the cost-of-living crisis that it could be worth seeking a new fixed-tariff energy deal before October when gas and electricity prices are set to rise again. That increase in the cost of energy bills could amount to an annual difference of £3,500 or more.
Inflation, meanwhile, has soared to a 40-year high of 10.1% with Lewis, the founder of MoneySavingExpert.com, suggesting that consumers should now consider a higher threshold when looking at what fixed-rate tariffs are currently on the market. Commenting on his website, the consumer champion explained that no fixed tariffs are meaningfully cheaper than current deals, but they will be if the predicted October hikes in price go ahead.
He stated: "If the predictions are right, on average you'll pay 117% more over the next year than you do now. If you're offered a year's fix at no more than 115% above your current price-capped tariff, or 120% more if you strongly value budgeting certainty, it's worth considering."
Previously, Lewis' advice had been to not switch to a fixed-rate deal that was more than 95% above the current price-capped tariff. But his opinion has changed after analysis from market research firm Cornwall Insight forecasted that the energy price cap will hit £3,554 from October, then climb to £4,650 from January.
Lewis also pointed out that the only fixed-rate deals usually worth considering were those that applied to existing customers although energy firms are not required to publicise those offers to their consumers, meaning it is a good idea to contact your provider directly. The ITV broadcaster added that one risk of grabbing a fixed offer now is not knowing who the next prime minister will be from September 5 and what measures they might introduce to tackle the energy bill crisis.
He expects there is only an "outside chance" that anything Liz Truss or Rishi Sunak implemented would reduce the price cap, which would obviously not be of assistance to anyone on a fixed deal. Lewis also reasoned that consumers could find themselves subject to a price cap anyway if their energy firm went bust in the future. The new energy price cap level will be announced by regulator Ofgem on Friday.
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