Global cost of living crisis: UK bill surge

What happened: The UK's energy price cap surged by 13% on July 1, 2022, raising average annual bills to £1,862, the highest in four years. This increase, driven by rising wholesale oil and gas costs, comes amidst a broader cost of living crisis. Four years into this crisis, 62% of low-income families struggle to buy essentials, and many are falling into debt. The prime minister is set to announce measures to ease the burden, while trade unions urge him to tackle the crisis at its source by pressuring the US to end the Middle East conflict.

Market impact: The energy bill surge affects millions of UK households, squeezing disposable incomes and increasing debt. This impacts consumer-facing sectors, with low-income families and Londoners hit hardest. The energy sector itself is under pressure, with suppliers' debt rising to a record £4.79bn. Retailers and service providers may face reduced consumer spending, while energy companies could see increased defaults and reduced profitability.

What to watch next: On July 28, 2022, Ofgem will announce the next energy price cap, which could further increase bills. The UK's inflation rate, due on August 17, 2022, will provide insight into the broader economic impact of the cost of living crisis. Additionally, the prime minister's cost of living support package, expected in the coming days, will reveal the government's strategy to mitigate the crisis.