Energy prices could fall further in October 2024 and January 2025, due to a mix of geopolitical and market developments.
The latest predictions from forecaster Cornwall Insight estimate that a typical dual fuel consumer’s energy bill will fall from £1,849 to £1,683 from July. Analysts are also forecasting a very slight fall in the price cap in October, with the cap falling again in January 2026.
The current price cap of £1,849 for Q2 2025 (April to June) is 6.4% higher than the Q1 (January to March) price cap of £1,738.
The price drops from July are predicted after the economic shock waves triggered by Donald Trump’s trade tariffs caused global gas market prices to slide. At the same time, above-average temperatures have reduced demand expectations and eased pressure on short-term prices.
However, researchers noted that while falling prices may appear to be good news, they are also a sign of how volatile the market remains. With the July cap still a month away from being finalised, it is too early to say whether these reductions will hold.
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Several geopolitical factors could continue to influence prices. For example, US tariffs could discourage liquified natural gas (LNG) exports to other countries, potentially pushing down US LNG prices. However, there’s no guarantee this cheaper gas would make its way to the UK market.
At the same time, discussions in the EU around easing gas storage requirements for the coming winter could reduce injection demand and put further downward pressure on prices. However, the wider geopolitical backdrop, including the conflict in Ukraine, the uncertain nature of the tariffs and broader economic uncertainty, could just as easily push prices back up.
Cornwall Insight said it expected a continued level of volatility in both prices and forecasts as markets respond to these ever-changing geopolitical, macroeconomic and supply-side dynamics.
‘We mustn’t get ahead of ourselves’
Dr Craig Lowrey, principal consultant at Cornwall Insight, said: “While a fall in bills will always be welcomed by households, we mustn’t get ahead of ourselves. We have all seen markets go up as fast as they go down, and the very fact the market dropped so quickly shows how vulnerable it [is] to geopolitical and market shifts.
“It would be easy to conclude the fall in the market was due to the United States’ tariffs, but the reality is that the interactions within and across the energy market are complex – from energy storage requirements in Europe, to warmer weather, to global trade issues – and contribute to the volatility we have seen in recent weeks.
“There is unfortunately no guarantee that any fall in prices will be sustained, and there is always the risk of the market rebounding. The only real way to protect households from this constant cycle of instability and insecurity is to reduce our dependence on international wholesale markets. That means continuing to focus on growing low-carbon energy generation here in Great Britain and building a more secure, more sustainable energy future.”
