Inflation and energy price cap to be slashed next week in double boost for Brits' finances

19 May 2023, 23:52 | Updated: 20 May 2023, 06:46

The rate of UK inflation and the energy price cap will be lowered in a double cost-of-living boost for Britain.

Ofgem's energy price cap will be lowered by £450 to £2,083 in a long-needed relief from the sky-high bills that have emerged in the wake of Russia's invasion of Ukraine.

The easing of wholesale energy costs has also led to an anticipated drop in the Consumer Price Index (CPI) rate of inflation from its current position of 10.1%.

Economists expect the figure to fall to between 8% and 8.5% on Wednesday which could lead to an easing of interest rates for many in mortgage pain after significant rises in recent months.

Ofgem will announce their price cap which will come into effect from July this week after the much-watched figure reached £3,500 going into last winter - causing the Government to intervene and refund customers £1,000 on average.

Read More: Sunak insists he will bring down taxes when inflation cools

Read More: Chancellor urges Tories not to talk the country down as he hints at tax cuts

The new figures will delight Chancellor Jeremy Hunt and Prime Minister Rishi Sunak after several bruising months where the Tories' handling of the economy has been heavily scrutinised.

At the G7 summit currently being held in Hiroshima, Japan, Mr Sunak said: “I’m a low-tax conservative… I want people’s hard work to be rewarded so I do want to be able to bring people’s taxes down.

"With high inflation and the rate of borrowing it is responsible to deal with that first.”

If inflation continues come down, it will be hoped that the Conservatives will be able to claim victory on one of the five pledges he made as a relaunch of the Tory government after he became Prime Minister in October.

It comes after a torrid few weeks for the Tories - who lost more than 1,000 councillors in the most recent local elections at the beginning of May.